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Incentives are all the rage: employee bonus pay, app badges, student grades, and even lunch with President Obama. Despite their widespread use, most research finds that incentives are terrible at improving performance in the long-run on anything but mindless rote tasks, because the fixation on prizes clouds our creative thinking (video explanation below). However, a new Harvard study of teachers found that a novel approach to incentives could dramatically improve student performance: give teachers a reward upfront and threaten to take it away if performance doesn’t actually improve. Exploiting the so-called “loss-aversion” tendency could open the door to creative incentivizing for software designers and managers.

Harvard University’s Ronald Fryer and his colleagues explain that, in education, pay-for-performance has a dismal record of improving student outcomes. Teachers who were offered sizable bundles of cash (up to $15,000) didn’t fare any better at helping their students than teachers who worked simply out of the goodness of their impoverished hearts. In india, teachers show modest gains the first year incentives, but the effect largely drops off a cliff the next year.

However, humans process loss differently gain. For instance, one study showed that people will pay more than twice as much money to keep a coffee mug they were given beforehand then to acquire it in the first place. The idea behind the “endowment effect“, popularized by Amos Tversky and Daniel Kahneman, is that people become psychologically territorial about their own stuff, and begin imagining all the ways they’ll use their new treasure once it’s in their hands. The research has been widely replicated and applied, such as in a Chinese factory to improve worker productivity.

The Harvard school experiment applied the logic in pretty much the same way: teachers were randomly selected to receive a bonus either at the beginning or end of the year; those getting the check up front (the treatment group) had to give it back if student performance didn’t improve as expected. Teachers could earn up to $8,000, depending on the level of improvement. The experimental group was cut a check for the expected amount ($4,000) upfront and had to give back or add to that amount depending on the actual performance at the end of the year.

The results were impressive by education standards: up to 10 percentile points on average (that’s 0.33 standard deviation units, for you statistic nerds).

The research holds exciting possibilities for business. Why not hand out bonus pay at the beginning of the year? Or, maybe give out restaurant discounts for a month, and revoke it if users don’t check-in on Foursquare each time they come.

The possibilities are endless and we’d love to hear your ideas. How do you use incentives in your organization? How could someone use loss-aversion to change the way incentives are given?

If you follow VentureBeat but don’t regularly check our GamesBeat site, here’s a list of the best games stories we ran over the last seven days that you may have missed.

This week, Konami cancels a patch for the Xbox 360 version of the Silent Hill HD collection (but totally updates it on PlayStation 3), Zynga’s chief operating officer steps down, and Amazon launches its own online studio and Facebook game.

You’ll also find a review for New Super Mario Bros. 2 and previews for Marvel: War of Heroes, FIFA 13, and PlayStation All-Star Battle Royale.

News

• TheDeanBeat: Kickstarter isn’t indie gamemaker Double Fine’s only funding route
• Blizzard’s authenticators breached in hack
• Calm down: Sony assures us that The Last Guardian is still in development
• Infinity Blade developers hire former Kingdoms of Amalur creators for new studio
• Ouya surpasses its funding goal on Kickstarter by $7.6M
• Konami cancels patch for Xbox 360 edition of Silent Hill HD Collection
• Game developers hate Windows 8, Microsoft responds
• Nancy Drew gamemaker turns to Kickstarter for mobile versions
• Facebook launches real-money gambling game in U.K.
• Wargaming acquires BigWorld middleware firm for $45M (exclusive)
• Amazon launches its own online game studio and first Facebook game
• The golden age returns? Seamus Blackley’s Innovative Leisure mobile game startup raises seed round (exclusive)

Second quarter earnings reports and NPD numbers

• Overall video game sales dive 20 percent in July, 3DS and NCAA Football 13 take top spots
• Nvidia earnings on the rise thanks to the Tegra 3 mobile processor
• Japan’s big console gamemaker, Square Enix, slips into a loss
• THQ losses beat expectations in fiscal first-quarter 2013

Interviews

• Guild Wars 2: Console ports, subscription models, and making sure it works on launch day (interview)
• Now just how many tanks can you fit in a battle map? Find out in the Armored Kill expansion for Battlefield 3 (interview)
• DoubleDown Interactive succeeds by not sucking at social casino games (interview)
• Game designer crosses over from making Halo games to Zynga’s social games — he’s never going back (interview)

Mobile News

• The Walking Dead shambles over to Facebook in new social game
• Activision’s The Blast Furnace resurrects Pitfall! for mobile devices
• Introducing The Blast Furnace, Activision’s first mobile-only development studio

Previews

• PlayStation All-Stars Battle Royale will kick your ass in ways you could never imagine (preview)
• EA shows off smart Wii U GamePad tricks for FIFA 13 and Mass Effect 3 (preview)
• Mass Effect 3: Leviathan boldly goes where no Shepard has gone before (preview)
• Marvel: War of Heroes distills superhero combat into card-based digestible chunks (preview)

Reviews

• New Super Mario Bros. 2 is too obsessed with reliving the good old days (review)

Oh, Zynga….

• Meet Gems With Friends, Zynga’s newest (and familiar-looking) iOS game
• Zynga COO John Schappert steps down
• Zynga sees FarmVille and CityVille user spikes [UPDATE: Maybe not]
• Will Zynga’s ChefVille revive the company’s fortunes?

Pieces of flair

• Decorate your iPhone the retro way with these gaming-themed wallpapers
• The first 5 games you should get for your Nexus 7
• Check out the Ghostbusters, Sonic, and Minecraft references hidden away in these Team Fortress 2 maps (gallery)
• Annoy your friends and impress no one: Cheats for casual games

Filed under: games

Now you can check-in to a location on Facebook through facial recognition scanning. The Redpepper ad agency claims to be beta testing a camera on the outside of a “Nashville business” that automatically checks patrons in to a location and offers them deals, after users have given the company access to their Facebook data (note: this was developed independently from Facebook). A video explanation of the technology, Facedeals, is below.

Facebook has come under intense congressional scrutiny for taking steps toward facial recognition, with the purchase of Face.com. However, after only a month, it ceased using the technology to automatically suggest which friends to tag in photos.

As Redpepper explains in a blog post, the alleged technology is done completely through a voluntary app:

The Facedeals app must be authorized via your Facebook account. With your help, the app verifies your most recent photo tags, using those to map the physical appearance of your face. Our custom-developed cameras then simply use this existing data to identify you in the real world. Personalized deals can now be delivered to your Smartphone from all participating locations—all you have to do is show your face.

Redpepper argues that the technology will help both consumers and businesses use the magic of Facebook to more efficiently dole out deals. What do you think? Creepy or awesome?

Our Facebook specialist Josh Constine wanted it be clear that Facedeals is not approved or endorsed by Facebook. It merely uses the social network as an easy way for people to upload photos for Facedeals to do its own facial recognition processing.

In fact, considering the name and coloring, Facedeals could get slapped with a trademark infringement lawsuit. Facebook is trying to downplay its use of facial recog technology, and probably won’t take kindly to this confusion and possibly fear-inducing employment of its platform.

Forbes has a story, which Google confirmed on Google+ of a new benefit that makes me go absolutely wow.

If a Google employee passes away while employed at Google, Google will continue to pay the family 50% of the Googlers salary for ten years!

Forbes wrote, “Should a U.S. Googler pass away while under the employ of the 14-year old search giant, their surviving spouse or domestic partner will receive a check for 50% of their salary every year for the next decade.”

Are there eligibility requirements? It seems like if you start the job at Google tomorrow and die the next day, your family is still eligible.

More so, Google told Forbes surviving spouses will see all stocks vested immediately and any children will receive a $1,000 monthly payment from the company until they reach the age of 19 (or 23 if the child is a full-time student).

Google confirmed it saying:

Forbes talks to Laszlo Bock, our VP of People Operations, about the philosophy behind the perks we provide for our employees and one of the newest benefits, which support employees’ families in the event of their death.

Forum discussion at Google+.

I have no idea how many Twitter followers I have. I haven’t checked in a year.

I don’t know how many Facebook friends I have either.

I haven’t checked my Klout score since the first time the site came out.

I haven’t checked my search engine rankings for over six years.

I haven’t looked at my Google analytics to see how much “traffic” I’ve gotten in a year.

I could care less how many video views my YouTube videos have.

I don’t check my Amazon sales stats for my books more than once a month.

Why? Because I don’t care about those things. It’s useless data to me. I measure success in sales and leads and connections. Not traffic and stats.

Yet despite not caring about those things, I still get 5-10 leads a week via my websites.

I still get journalists calling me to quote me in stories.

I still get spam and countless other pitches from people who don’t do their research.

I still get asked to speak to thousands of people.

I still get a wonderful network of associates and friends who I cherish.

I still maintain my own business and live the lifestyle that I want.

Something for you to think about. Are you worrying too much about the things that don’t really matter?

Google is about to write a very big check to the Federal Trade Commission.

The company has agreed to pay a $22.5 million fine, the largest one imposed by the FTC on a single company.

The fine comes after Google was charged with violating a 2011 agreement with the FTC by installing tracking cookies in Apple’s Safari browser. According to the agreement, Google wasn’t allowed to misrepresent to consumers how it collected user data. But by installing the tracking cookies the FTC alleges that Google did just that.

Reports of the settlement emerged last month, though at the time it wasn’t clear whether Google would agree to pay it.

Not an indication that Google violated the law, nor a particularly large amount of money, the fine is meant to send a clear message to companies under FTC supervision.

“No matter how big or small, all companies must abide by FTC orders against them and keep their privacy promises to consumers, or they will end up paying many times what it would have cost to comply in the first place,” FTC Chairman Jon Leibowitz said in a statement.

Basically, the FTC wants companies to know that it has some teeth, and that it plans to take agreement violations very seriously in the future.

Echoing previous responses verbatim, a Google spokesperson told VentureBeat that Google is dedicated to setting high standards of privacy and security for its users.

“We have now changed that page and taken steps to remove the ad cookies, which collected no personal information, from Apple’s browsers,” the spokesperson said.

Filed under: VentureBeat

Google announced plans to discontinue paying AdSense publishers by check in all countries where they officially support paying by electronic funds transfer (EFT).

Google said “EFT payments are free of charge, less error prone…

Google announced plans to discontinue paying AdSense publishers by check in all countries where they officially support paying by electronic funds transfer (EFT).

Google said “EFT payments are free of charge, less error prone, more efficient and the most environmentally-friendly payment method.” In fact, Google has recommended EFT since before 2007, just two years after the EFT option within AdSense went out of beta.

Now, Google is going to require most publishers to receive payment via EFT. For most of you, this is not a big deal. Personally, I’ve always received them via check, but switching to EFT is not a big deal for me.

Google wrote:

With these changes, please note that the new system wonât support check payments in countries where we offer EFT as a form of payment. If youâre located in a country where we offer EFT payments and you currently receive check payments, please be advised that youâll need to complete a few steps once your account is upgraded. However, no immediate action is required on your part at the moment. Once your account is transitioned to the new system, youâll receive an email notification with detailed instructions on setting up EFT payments.

To see if you are effected, see the list of countries on this page.

Here is a video Google made on EFT AdSense payments in 2009:

Is this going to be an issue for you?

Forum discussion at WebmasterWorld.

The name “Vooza” has emerged on the tech scene in recent weeks with some pretty entertaining videos that do straight-faced impressions of the worst of today’s buzzy startup culture (check out their latest one, which is embedded above.) While Vooza itself probably isn’t for real as a company — as Wired UK has pointed out, its supposed CEO Matt Stillman is a dead ringer for NYC stand-up comic Matt Ruby — its knack for making hilariously catchy videos is, having caught the attention of the likes of Dennis Crowley and David Karp.

So it’s interesting to see Vooza teaming up with Switch Video, the totally legit company that makes animated product pitch videos for startups. Vooza and Switch are running a contest to give away a free “explainer” video.

It doesn’t seem like this is actually what Vooza is looking to do full-time (I’m thinking it’s more just a very clever publicity tool for Ruby’s show biz career) but this could be a pretty sweet one-time deal for someone looking to launch a startup or product. I mean, there’s nothing worse than a startup video that aims to be funny but falls flat — and the people behind Vooza do have what it takes to make stuff that’s actually humorous.

The contest runs in three pretty straightforward rounds:

1. In round one, interested people can sign up with their names and contact information, and spread the fact that they entered via Twitter or Facebook.
2. Then there’s round two. “In this round we find out who really has what it takes to leverage the power of video,” Vooza says with a wink (I think.) This is where people fill out a more detailed application about why they should win.
3. In round three, Vooza and Switch will pick the ten top entries and put them up for a public vote. The voting will start August 22nd and end at noon Pacific Time August 29th. “At the end of the day, the epic startup rockstars with the most votes wins,” Vooza says with tongue planted in cheek (I think.)

Anyway, it seems like a fun summer fling, and should produce a pretty interesting video at the end of it all. Check out more details here.

As you probably know the online store is one of the most profitable business models you can have online. And that is because you’ll be selling something from day one, which means that if you put the effort to increase your traffic you’ll immediately see a return (i.e., sales).

What most people don’t know is that setting up an online store is quite easy actually. What you need is the right platform, and I recommend that you check out IzzoNet.

Think about it like an online store software with hosting included, so you won’t need to worry about anything else. The main advantage of using such a platform is that the software was built with the creation of stores in mind, so doing stuff like adding products, settings images, choosing prices and integrating the shopping cart are all easy to do.

If you want to check all the featured offered by IzzoNet, check out this page. Some of them are:

• Drag-n-drop interface when building your store
• Unlimited website widgets
• Free images for your website design
• Full HTML and CSS access to customize things
• Logo and watermark maker

As you can designing the store won’t be a problem as they pretty much offer all the tools you need.

Now here’s one key difference that makes me recommend IzzoNet instead of the other online store platforms: they offer built-in support for drop shipping. Drop shipping is a model where you’ll not to produce or store the products yourself. You will just sell them, and after every sale you forward the order to a wholesaler, who then ships the product on your behalf. You make money from the difference of the price you charge your clients and the price you pay the wholesaler.

Inside the control panel you’ll find a tab that says “Dropshipper Management”. From there you can communicate directly with your suppliers, manage invoices and orders, track orders until they reach your clients and so on, which will make running a drop shipping store a lot easier.

In theory you could create online store not using such a platform, but I think it would add a lot of headaches to the process. If you go with an online store platform the part of getting the store up and running will be taken care of, and you’ll be able to focus on promoting the website and generating traffic and sales, which is your main goal after all.

The guys at IzzoNet also offer a 15-day free trial, where you can start building your store and test all the internal features before deciding if you want to use them, so check it out.