We’re in This Together: The Motivational Effects of Tangible Rewards in a Group Setting

Abstract

We design three experiments to examine how group incentives moderate the motivational effects of cash versus tangible rewards. Our first experiment shows that, relative to individual incentives, group incentives can magnify any negative effect of the uncertain attractiveness of a less-fungible tangible reward (versus cash), as group members must evaluate not only how attractive they find the reward themselves but also how attractive other group members are likely to find it. However, as we show in our second experiment, under group incentives, structuring a tangible reward as a shared experience among group members who like each other can mitigate any demotivating effect of an individually consumed tangible reward vis-à-vis a cash reward. A third experiment provides process support for our theory, showing that both the attractiveness of the reward and the degree of certainty that others will also find it attractive jointly and fully mediate our findings. As a whole, our study furthers an understanding of the multifaceted dimensions of tangible rewards, identifying incremental effects that can arise when tangible rewards are combined with group incentives.

Keywords: tangible rewards, group incentives, effort, productivity