Introduction Of Monetary Incentives Research Articles

Monetary Incentives and Knowledge Spillover: Evidence from a Natural Experiment

We examine how the introduction of monetary incentives by a knowledge-sharing platform affects the nonrewarded 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 nonhosts. 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. This paper was accepted by Kartik Hosanagar, information systems.

When the Patina of Empirical Respectability Wears off: Motivational Crowding and Kidney Sales

An increasingly common objection to kidney sales holds that the introduction of monetary incentives may undermine potential donors’ altruism, discourage donation, and possibly result in a net reduction in the supply of kidneys. To explain why incentives might be counterproductive in this way market opponents marshal evidence from behavioral economics. In particular, they claim that the context of kidney sales is ripe for motivational crowding. This reasoning, if sound, would have a profound influence on the debate over kidney sales. What’s perhaps the principal reason to favor a market – the increase in supply it would bring – would be called into doubt. However, on inspection it becomes apparent that the evidence touted by market opponents not only lends no credence to their claims, but also provides some positive reason to doubt them. The near-ubiquitous references to motivational crowding in the literature on kidney sales are fundamentally misplaced.

An analysis of economic incentives to encourage organ donation: evidence from Chile

We perform a cost–benefit analysis on the introduction of monetary incentives for living kidney donations by estimating the compensation that would make an individual indifferent between donating and not donating a kidney while alive using Chilean data. We find that monetary incentives of US$12,000 save US$38,000 to health care system per donor and up to US$169,871 when we consider the gains in quality of life of receiving an organ. As one allows the incentives to vary depending on the individual position on the wage distribution, the compensation ranges from US$4214 to US$83,953. Importantly, introducing payments to living donors payable by a third party helps patients who currently may not have access to necessary medical treatment. Therefore, exclusions in access for organs due to the monetary constraints can be prevented.

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

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.

A shared sense of responsibility: Money versus effort contributions in the voluntary provision of public goods

A frequently cited argument against the use of market-based instruments to provide public goods is that they diminish our sense of responsibility to be good citizens. We report on a laboratory experiment exploring whether the choice of some to contribute money in lieu effort affects the voluntary contributions of those who continue to provide effort. Subjects complete lab tasks as a contribution to a public good – carbon emission reductions. These effort contributions decrease as peers accept an offer to contribute money instead of effort. However, the aggregate result masks significant heterogeneity. Those who choose not to buy out despite its expected profitability have no response to the treatment, while those for whom it would not be profitable to buy out register large reductions in effort contributions. The magnitude of these responses increases in the share of the group accepting the buyout, suggesting that is the act of peers buying out – rather than the introduction of monetary incentives – that drives the effect.

Expériences de laboratoire en économie et incitations monétaires

La mise en place d’une procédure monétaire incitative dans le cadre d’une expérience de laboratoire en économie suppose l’existence d’une relation positive étroite entre incitation et effort d’une part et entre effort et performance d’autre part. Pourtant, sur le plan empirique, l’impact des incitations monétaires sur l’effort et/ou la performance apparaît plus mitigé, voire négatif. Nous revenons ici sur un certain nombre d’arguments théoriques et empiriques avancés dans la littérature pour expliquer cet écart. Sont ainsi mis en cause le montant insuffisant des incitations, l’inadéquation des procédures incitatives utilisées, la fragilité du lien entre incitation et effort et/ou entre effort et performance, le rôle ambigu de la motivation intrinsèque. Nous nous intéressons ensuite au cas particulier de l’expérimentation dans des contextes de pertes, qui pose de manière plus fondamentale la question de l’opportunité des incitations monétaires. Nous concluons sur la nécessité d’une utilisation pragmatique de ces dernières selon la nature de l’étude envisagée.

Why Does the Introduction of Monetary Compensation Produce a Reduction in Performance?

According to empirical evidence, extrinsic incentives often crowd out intrinsic motivation, thus reducing the effort choices of workers. This article presents a simple model illustrating how the introduction of monetary incentives causes a discontinuous reduction in worker effort as well as a reduction in worker motivation to act in the interest of a principal. The primary finding is that motivation crowding out occurs when then the object of an agent's intrinsic motivation is a principal who is also the source of the extrinsic compensation the agent receives. When intrinsic satisfaction is directed at more generalized social norms of behavior, however, extrinsic rewards will not crowd out intrinsic motivation.

On the Hidden Costs of Incentive Schemes

By enriching a principal-agent model it is shown that the introduction of monetary incentives may reduce an agent's motivation. In a first step, we allow for the possibility that some agents stick to unverifiable agreements. The larger the fraction of reliable agents, the lower powered will then be the optimal incentive scheme and fixed wages become optimal when performance measurement is costly. If social norms matter such that some agents' reliability is influenced by their beliefs on the convictions of others, high powered incentives signal that not sticking to agreements is a widespread behavior and may lead to lower effort levels. crowding-out, honesty

A Paired Comparisons Scale of Children's Preferences for Monetary and Material Rewards Used in Investigations of Incentive Effects

Summary The method of paired comparisons was used to determine 40 first-, third-, and fifth-grade children's preferences for 12 objects frequently employed as rewards in developmental studies. Significant coefficients of agreement demonstrated stability in the preference order of the 12 objects across the three grades, despite minor fluctuations in preferences for some items. Increases in both intraindividual consistency and interindividual ageement were obtained as a function of developmental level. Despite the introduction of monetary incentives to replace edible rewards employed in a study a decade earlier, the eight rewards common to both scales approximated rank order identity; consistency and agreement data, and developmental trends were highly similar in both studies. Differentiation of preferences increased with age. Full appreciation of the quantitative relationship between the dime and nickel developed between first and third grade, and the coins increased in salience relative to the other rewar...