Beating Expectations: Turning Polarized Beliefs into Support for Sustainable Initiatives

Organizations increasingly face polarized beliefs about issues such as sustainability and environmental action. This paper demonstrates that such polarization can, paradoxically, be leveraged as a managerial advantage. When individuals’ subjective beliefs diverge from market probabilities, organizations can design state-specific payouts, where bonuses or refunds are tied to verifiable future outcomes. Under such schemes, individuals receive larger payouts in the states they overestimate relative to market probabilities. This increases an initiative’s subjective expected value without affecting its objective expected cost. Across multiple large-scale experiments spanning corporate and public contexts, state-specific payouts substantially increase support for contested initiatives, particularly among individuals whose beliefs deviate from market probabilities. Additional studies explore ethical and practical boundaries. Together, the results introduce a principle of belief-based design. By applying insights from financial engineering to managerial decision making, organizations can align incentives with heterogeneous beliefs and transform polarization from a barrier into a strategic asset.

This paper was accepted by Aurelien Baillon, behavioral economics and decision analysis.

Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2025.01277.