Financial Incentives Dampen Altruism in Online Prosocial Contributions: A Study of Online Reviews

Abstract

This paper uses a large Amazon review data set to examine the impact of financial incentives on prosocial contributions. The econometric analyses demonstrate a significant spillover effect, where product reviewers, after experiencing the receipt of financial incentives, tend to produce more positive but lower-quality unincentivized reviews subsequently. Theoretically, this paper advances our understanding of the interplay between financial incentives and prosocial behaviors through the lens of self-determination theory. Practically, this study provides insights into the design of online prosocial communities. Managers should not be enticed solely by an immediate increase in contribution quantity because the increased contribution volume might come at the cost of decreased quality in future unincentivized contributions. If platforms decide to provide financial incentives, they should target only altruistic contributors and limit the amount of incentives that an individual can receive. These findings provide important managerial implications for platforms hoping to motivate users’ prosocial contributions.