The Nature and Extent of Post-Reward Crowding-Out: The ‘Effort-Balancing’ Account

61 Pages Posted: 18 Feb 2016

See all articles by Indranil Goswami

Indranil Goswami

University at Buffalo, SUNY - Department of Marketing

Oleg Urminsky

University of Chicago - Booth School of Business

Date Written: 2015

Abstract

Although incentives can be a powerful motivator of behavior, research on intrinsic motivation has suggested that rewards can crowd-out task interest, reducing engagement when rewards end. This research has resulted in widespread skepticism among practitioners and academics alike about using incentives in interventions. However, recent field studies examining the long-term effects of temporary incentives have not found such effects. We propose a new Effort-Balancing account, which suggests that post-reward crowding-out often represents the need for a ‘break’ after investing effort, rather than a change in interpretation of the task or beliefs about own preferences. As a result, post-reward crowding-out is relatively momentary and consistent with longer-term neutral or positive spillover effects of temporary incentives. We test a series of novel predictions, including that momentary crowding-out will be reduced when efforts are more balanced by rewards (e.g., higher reward magnitude or a less effortful activity) or when people are given a break. The implications of momentary crowding-out for long-term behavior and design of incentive programs are discussed.

Keywords: intrinsic motivation, crowding-out, incentives, long-term behavior, decision making

Suggested Citation

Goswami, Indranil and Urminsky, Oleg, The Nature and Extent of Post-Reward Crowding-Out: The ‘Effort-Balancing’ Account (2015). Available at SSRN: https://ssrn.com/abstract=2733335 or http://dx.doi.org/10.2139/ssrn.2733335

Indranil Goswami

University at Buffalo, SUNY - Department of Marketing ( email )

Buffalo, NY
United States

HOME PAGE: http://https://mgt.buffalo.edu/faculty/academic-departments/marketing/faculty/indranil-goswami.html

Oleg Urminsky (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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