How to design rules that work

Rules are ever present in our daily lives. We follow social rules, company rules, and laws. We create organizations by making sets of rules, we create deals and contracts all defined by rules. But very few people learn how to create rules. Most rules, don’t work. As a former game designer, I’ve studied rules academically and tried and tested rules by the thousands. This is what I’ve learnt so far about creating rules that work.
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The Prestige Problem

Prestige is usually a problem in organizations and development alike. People with too much prestige become complacent some of the time and obstacles for the organization, most often this happens not on purpose but because of the real prestige the individual has earned over years of work.

Because of this problem many companies and developers strive for prestigeless workspaces. They ask for prestigeless applicants and so forth. But this attitude lacks a basic understanding of prestige.

Prestige is a cultural gauge which we use to measure ourselves with. If you as an individual do good things and make good things happen you usually acquire prestige from your surrounding social circle (whether privately or professionally). But if you perform poorly or bring about negative effects you usually lose prestige.

While this system is far from perfect (a single mistake might wipe you out) and for form fair (seeming to deliver gives as much prestige as actually delivering, presuming you can keep the facade up) it is still a social system all organizations should be aware of. No one can be completely free from prestige. And they should not either.

Prestige is usually the most direct form of reward individuals can see as a result of their work.

But we also need to be really wary of prestige, it can lead to horrible evils in any organization. Perhaps it might help if we start thinking about prestige as something less durable. What do you think?