In another extra credit assignment for my EEP100 students, I asked them to solve a collective action problem in their [group] household. These problems are the kind that drive roommates crazy: one person never washes his dishes, leaving them for others; another one claims that she doesn't have time to take out the trash, etc.
(The assignment required that the student identify a problem, propose a solution, and get all household members to sign an agreement to implement that solution. In hindsight, I should have given this assignment at the start of the semester, to see if promises turned into actions.)
Once again, there were many interesting problems and solutions. (I observed that girls are no better than boys at these types of cooperative games, and that a lot of people have trouble with trash :)
Julia had a great solution [doc] to her household's trash and recycling problem: All five roommates deposit money into the chores jar in advance. As they fulfill their promises, they get their money back. Instead of the typical solution (take money if people for not doing their work), this one created a positive incentive -- payment for doing the work.
Although mathematicians and (some) economists may observe that paying someone with their own money makes no sense, psychologists and economists familiar with prospect theory will see how useful this idea is. People HATE giving up money as fines, but they are pleased to give it up with the promise of getting it back. Once the money is gone, they forget about it, and are HAPPY to be paid -- with their own money -- for doing the task.
Imagine, for example, if people pledged $100 per year toward driving safely. Those who got tickets would get nothing (and maybe pay more); those who did well would get a $100 check at the end of the year :)
Bottom Line: Incentives matter, but timing and flows (fines versus rewards) can turbocharge these incentives.