Do Monetary Incentives Create a Spillover Effect on Free Knowledge Contribution? Evidence from a Natural Experiment

Abstract

We examine how the introduction of monetary incentives by a knowledge-sharing platform affects the non-rewarded knowledge activity on the platform. Our setting is a question-and-answer platform that provides monetary incentives for holding live talks. Using a combination of coarsened exact matching and difference-in-differences estimation techniques, we find that the launch of the paid feature creates a positive spillover effect on the hosts’ free contributions, specifically, 9.4%–40.8% more answers, in the short run when compared with non-hosts. The paid feature did not result in any significant change in the quality of answers. We suggest reputation building is one plausible mechanism underlying the spillover. Additional analyses reveal the spillover effect is negative for short-lived hosts in the long run, indicating possible crowding out of free contributions. The positive spillover effect for long-lived hosts lasts longer but is also reduced over time. Our findings suggest that introducing monetary incentives can be a viable business model for knowledge platforms to stimulate user contributions in both the paid and related unpaid activities. Yet, platform owners should be cautious about the potential negative spillover after users stop contributing to the paid activity and develop effective strategies to maintain users’ long-term interests in the paid program.