Financial Incentives Dampen Altruism in Online Pro-social Contributions: A Study of Online Reviews

Abstract

Many online platforms, such as review communities, rely on crowds’ voluntary, altruistic contributions. Some platforms attempt to provide financial incentives to encourage users to contribute. While past studies have demonstrated that monetary rewards can negatively affect individuals’ incentivized contributions, little is known regarding whether this effect spills over into individuals’ subsequent, unincentivized pro-social activities. Our paper aims to bridge this gap by studying the potential spillover effect of financial incentives on subsequent, pro-social contributions based on self-determination theory. Specifically, we conduct empirical analyses of a large Amazon review data set and use machine learning methods to identify reviewers who have received financial incentives. The econometric analyses show that the receipt of financial incentives has a significant spillover effect on reviewers’ subsequent, unincentivized reviews, which tend to have a more positive sentiment, and the reviewers tend to reduce the review length and exert less linguistic effort in writing them. We conduct a series of robustness checks and find consistent results. We also study how the spillover effects differ based on the product type (i.e., search goods vs. experience goods), incentive experience, pro-social experience, and reviewer quality, and we explore the within-product spillover effect. These findings advance the understanding of the interplay between financial incentives and pro-social behaviors and provide important managerial implications for platforms that hope to motivate users’ pro-social contributions.

Keywords: altruism, financial incentives, pro-social behavior, self-determination theory, spillover effect