The incentive structure in an online information market

Abstract

AbstractThe principal objective of this research was to understand the incentive structure in a mixed economic and social market for information. Prior research suggests that tangible incentives will crowd out intangible incentives; however, information markets invite special examination of this finding. Data representing four years of activity by 523 researchers who gave about 52,000 answers on the Google Answers Web site were collected. Analysis revealed that the main predictor for researchers' participation was the anticipation of tip (gratuity). Analysis of two researcher subgroups showed that in the case of the frequent researchers, the tip was followed by social incentives: interaction (comments) and ratings. For occasional researchers, the tip was followed by the price paid for answers and then by comments. The results suggest that a pure economic incentive serves as enticement; however, social incentives induce persistent participation by researchers and eventually lead to higher average economic gains. The market is catalyzed by social activity, not cannibalized by it, as may have been predicted by theory. This finding provides empirical evidence for “social capital” since social incentives were connected to higher economic gains. The practical implication is that a mixed incentive design is likely to generate lively information‐exchange environments.