Prosocial Incentives Research Articles

Financial and prosocial incentives promote pro-environmental behavior in a consequential laboratory task

Incentives are a popular tool for fostering pro-environmental behavior. However, it is still largely unknown which types of incentives are most effective during incentive implementation and beyond incentive discontinuation. One likely reason for this is that incentives are often tested in noisy field settings where controlled comparisons and longitudinal assessments are difficult. In this study, we address this limitation by studying incentive effects on consequential pro-environmental behavior in the laboratory. In a preregistered experiment, N = 238 participants were repeatedly given the choice to save actual energy at a real waiting-time cost in the Pro-Environmental Behavior Task (PEBT). Incentivizing the energy-saving option with a 5-cent bonus payment led to a significant increase in pro-environmental behavior compared to a no-incentive control group (d = 0.68). Incentivizing the energy-saving option with a 5-cent donation to charity had a smaller, but still significant effect (d = 0.28). The difference between the incentive conditions was also significant (d = 0.41). Group differences disappeared in a follow-up experimental session that was completed without incentives. These data illustrate the (temporally limited) effectiveness of financial and prosocial incentives and the possibility of studying incentive effects on actual pro-environmental behavior in the laboratory.

Do prosocial incentives motivate women to set higher goals and improve performance?

We investigate the effect of prosocial rewards on goal-setting and performance of women. We designed an online experiment where participants performed real-effort tasks. In our experimental treatments, participants were asked to set their own goals as to how many tasks they would perform within a fixed time frame. Contrary to previous research indicating that women tend to underperform due to setting lower goals for themselves compared to men, our study demonstrates that when rewards are prosocial, women set challenging, but achievable and their performance improves. Our results suggest that prosocial incentives within the goal-setting scheme can be an effective way to help women improve their performance.

Can prosocial incentives and self-chosen goals improve performance? An online real-effort experiment

Abstract We study incentive schemes that combine self-chosen goals with prosocial rewards. We design a real-effort task experiment with MTurk workers. Upon achieving self-chosen goals, rewards are paid to the worker in the monetary treatments or to charities in the prosocial treatments. To explore the mechanisms whereby rewards can improve performance with prosocial incentives, we develop a theoretical model with goal dependence and earning reference points. Our results show that when rewards are paid to charities, performance improvements happen through workers setting higher goals. This effect is stronger for those whose interests are matched with the charity’s mission. Our findings have important implications for incentivizing workers in the gig economy.

Grand challenges and platform ecosystems: Scaling solutions for wicked ecological and societal problems

AbstractThe persistence of grand societal and environmental challenges demands attention from innovation management scholars and practitioners to find effective resolutions. Grand challenges are complex, uncertain, and evaluative and cannot be resolved by individual actors or organizations. Therefore, conventional forms of organizing do not suffice in the face of wicked problems like climate change or global inequality, which require continuous and varied attention and inputs. In this catalyst article, I argue that platform ecosystems—communities and groups of actors in different markets orchestrated through a digital platform and driven by combinations of economic and prosocial incentives—are an organizing form that can help effectively scale solutions for grand societal and environmental problems. This potential is based on three organizational elements of platform ecosystems: (1) coordination structures for orchestrating complementary inputs, (2) instigation and maintenance of collective action, and (3) generativity potential. I illustrate these arguments with practical examples of two platforms with the potential to resolve specific grand challenges: Patient Innovation, which orchestrates a community of innovators seeking to help treatment of chronic and rare diseases, and Excess Materials Exchange, which provides matching solutions to address the challenges associated with industrial material waste. The article concludes with an agenda for future research and practice on platform ecosystems and grand challenges.

Effects of the limited incentive pool on cooperation evolution in public goods game

Cooperative behavior is prevalent in human societies, yet it is often undermined by selfish individuals. Within the framework of evolutionary game theory, pro-social incentives are often considered to be an effective means of promoting cooperation. In fact, however, the resources (including human resources, budget, etc.) to implement incentives are often limited for the institutions. Based on the public goods game, this paper introduces the concept of limited (negative or positive) incentive pool, in which the number of punishers/rewarders that the incentive pool can accommodate is limited. When the capacity of the incentive pool reaches the maximum, the remaining individuals who want to perform the punish/reward behavior will automatically withdraw from the game. Experimental simulations show that the introduction of positive/negative incentive facilitates the promotion and maintenance of cooperation, and that negative incentive is more effective in promoting cooperation and inhibit defection than positive incentives.

Using prosocial incentives to promote vegetarian food choices: A field experiment

Vegetarian diets can produce beneficial consequences for animal welfare, human health, and the natural environment, but these consequences are often too distant and intangible to affect everyday food choices. In the present field experiment (N = 741 observations), we examined whether vegetarian food choices can be promoted by linking them to an additional, more concrete consequence. Customers of a pasta restaurant were informed that we would make a small donation to an environmental organization for every purchase of a vegetarian pasta dish. The implementation of this prosocial incentive increased the odds of choosing vegetarian dish options by a significant 50 % in comparison to a control condition and 75 % in comparison to baseline. No significant differences were observed between a prosocial incentive that was framed in monetary terms and an even more tangible variant that linked vegetarian dish choices to the planting of trees. These results illustrate the effectiveness of prosocial incentives as a behavior change technique for reducing meat consumption and promoting vegetarian alternatives.

Can Prosocial Incentives and Self-chosen Goals Improve Performance? An Online Real Effort Experiment

Can Prosocial Incentives and Self-chosen Goals Improve Performance? An Online Real Effort Experiment

Decentralized incentives for general well-being in networked public goods game

Prosocial incentives are recognized as effective tools to promote public cooperation. But their usage is costly, hence we need to find an optimal policy that offers the best outcome for a minimal cost. This problem has attracted extensive attention of scholars from many fields, and it has been studied intensively in well-mixed populations. Yet, the system behavior in the case of group interactions where decentralized incentives are involved is rather unexplored. To fill this gap, we consider the possible consequences of decentralized rewarding and punishing incentives in a spatially arranged population where players play public goods game with their neighbors. Importantly, both time-independent and dynamically varying cases are checked. With the help of pair approximation approach, we derive the dynamical equations under weak selection and obtain theoretical conditions of the minimally requested amounts for the expected outcome. By using optimal control theory, we also devise an index function to quantify the executing costs and obtain the optimal dynamical punishing and rewarding protocols. In addition, both numerical calculations and Monte Carlo simulations support that the optimal dynamical rewarding scheme requires a lower cumulative cost than the punishing alternative if the initial cooperation level is below a threshold value. Otherwise, the usage of punishment is more efficient.

Reducing Plastic Bag Use Through Prosocial Incentives

While excessive plastic use has severe ecological consequences, the distant nature of these consequences may limit their effect on individual plastic use behavior. One possibility to address this problem is to link plastic use behavior to more direct consequences. Pro-environmental behavior researchers adopting this approach typically try to change people’s behavior by providing them with monetary incentives. Here, we pursued an alternative strategy by linking pro-environmental behavior to prosocial incentives. Takeaway customers of a fast food restaurant were informed that, for every unused plastic bag, a small donation would be made to a charitable organization. In comparison to baseline and control conditions, the likelihood of using a restaurant-provided plastic bag was more than halved when plastic-bag refusal led to such prosocial incentives. In addition, we tested whether the effectiveness of prosocial incentives depended on their size and on the type of organization (prosocial vs. environmental) receiving the incentive. While these latter analyses revealed some promising trends, they did not allow for definitive conclusions about the effect of these parameters. Hence, while our field experiment provides support for the general effectiveness of prosocial incentives, more research is needed to determine which prosocial incentives are most effective in shaping plastic bag use and other environmentally relevant behaviors.

Prosocial Incentives Change Willingness to Compete in Work Tasks: The Role of Gender and Performance

This study examines the effects of prosocial incentives, where charities benefit from an individual’s efforts, on workers’ willingness to compete in a work task in an experimental setting. Counter to expectations and prior literature, prosocial incentives reduce a worker’s willingness to compete. Women across all levels of performance are largely driving this result, though lower performing men also appear to opt out of competition more often to take guaranteed wages for charity. With so many low performers opting out of competitions that they would lose to take guaranteed payment, I observe that performance-based earnings increased under the prosocial incentives scheme. Qualitative evidence suggest an underlying mechanism, the fear of getting zero for charity, is the main reason for the change and that women were more likely to report this fear. A second experiment finds that eliminating the possibility of getting zero —with lower payout variance and increased expected returns to competition, results in top performing women become as likely as men to enter competition in work tasks with prosocial incentives. I discuss how these insights could inform the design of incentives in the field.

Promoting Physical Activity Through Prosocial Incentives on Mobile Platforms

The proliferation of mobile applications provides new opportunities to promote users' physical activity, which is crucial for health and well-being. The prior literature has discussed the effectiveness of designing incentives for physical activity, such as financial and social incentives. Yet, little is known about the effectiveness of the prosocial incentive, another increasingly popular incentive adopted by many platforms. By combining a field experiment of more than 40 million users and observational analysis on a giant social network platform in East Asia, we provide evidence of the effectiveness of prosocial incentives on promoting physical activity. Specifically, by reminding users to engage in an online event named ``step donation'' which associates users' step counts with donation received by charities, our experiment estimates an average increase of 1000 steps for users being encouraged to engage in this event. To supplement the experiment result, we further conduct matching on observational data to compare the effects between prosocial (step donation) and social incentive (another feature named step ranking), finding that the prosocial incentive may even be more effective than the social incentive in our sample. Finally, we discuss plausible prosocial motivations that drive step donation engagement and use a regression discontinuity design to identify users likely driven by warm glow giving. Overall, our study shows the potential of leveraging prosocial incentives to encourage physical activity and sheds light on possible further improvements on the design of prosocial incentives.

Reduced frontal cortical tracking of conflict between self-beneficial versus prosocial motives in Narcissistic Personality Disorder

Narcissistic Personality Disorder (NPD) entails severe impairments in interpersonal functioning that are likely driven by self-beneficial and exploitative behavior. Here, we investigate the underlying motivational and neural mechanisms of prosocial decision-making by experimentally manipulating motivational conflict between self-beneficial and prosocial incentives. One group of patients diagnosed with NPD and a group of healthy controls (CTL) were scanned using functional magnetic resonance imaging while performing a prosocial decision-making task. In this task, we systematically varied the level of conflict between self-beneficial and prosocial options on each trial. We analyzed choice behavior, response times, and neural activity in regions associated with conflict monitoring to test how motivational conflict drives prosocial choice behavior. Participants in the NPD group behaved less prosocially than the CTL group overall. Varying degrees of motivational conflict between self-beneficial and prosocial options induced response variability in both groups, but more so in the CTL group. The NPD group responded faster than the CTL group, unless choosing prosocially, which slowed response times to a level comparable to the CTL group. Additionally, neural activity tracking motivational conflict in dorsomedial prefrontal cortex was reduced in the NPD group. Collectively, low generosity in NPD appears to arise from reduced consideration of prosocial motives, which obviates motivational conflict with self-beneficial motives and entails reduced activity in neural conflict monitoring systems. Yet, our data also indicate that NPD is not marked by an absolute indifference to others’ needs. This points to potentials for improving interpersonal relationships, effectively supporting the well-being of patients and their peers.

Intentions for Doing Good Matter for Doing Well: The Negative Effects of Prosocial Incentives

Abstract Many firms consider prosocial initiatives to be an effective tool to motivate workers. However, despite some initial supportive evidence, little is known about when and how prosocial incentives work. Our field experiment shows that the instrumental use of prosocial incentives to increase effort can backfire. The negative effect is particularly strong for performance-based prosocial incentives, which are, by construction, more instrumental than unconditional incentives, and for the workers who do not care about the charitable cause. These findings highlight some serious limitations of prosocial incentives: firms’ perceived intentions and the pool of employees will be crucial for their effectiveness.

The Impact of Management Practices on Employee Productivity: A Field Experiment with Airline Captains

Increasing evidence indicates the importance of management in determining firms' productivity. Yet, causal evidence regarding the effectiveness of management practices is scarce, especially for high-skilled workers in the developed world. In an eight-month field experiment measuring the productivity of captains in the commercial aviation sector, we test four distinct management practices: (i) performance monitoring; (ii) performance feedback; (iii) target setting; and (iv) prosocial incentives. We find that these management practices -particularly performance monitoring and target setting- significantly increase captains' productivity with respect to the targeted fuel-saving dimensions. We identify positive spillovers of the tested management practices on job satisfaction and carbon dioxide emissions, and captains overwhelmingly express desire for deeper managerial engagement. Both the implementation and the results of the study reveal an uncharted opportunity for management researchers to delve into the black box of firms and rigorously examine the determinants of productivity amongst skilled labor.

When Does Altruism Trump Self-Interest? The Moderating Role of Affect in Extrinsic Incentives

Extensive use of incentives in practice suggests that they play a key role in motivating behavior. However, conflicting findings have emerged about the effectiveness of various types of incentives (e.g., a cash incentive vs. a donation to charity). We propose a theoretical framework to explain when and why different types of incentives may be more effective. We posit that motivational efficacy of an incentive is jointly determined by its cognitive and affective value. Thus, an incentive offering a donation to charity can be more motivating than an equivalent cash incentive for the self when the incentive amount is low because, although both lack a motivating cognitive valuation, superior affective valuation of the prosocial incentive can increase its relative effectiveness. Consistent with this account, we demonstrate that low-amount self-benefiting incentives become more motivating when their affective value is enhanced, and low-amount prosocial incentives become less motivating as their affective value is attenuated.

The Reputational Benefits and Material Burdens of Prosocial Referral Incentives

While selfish incentives typically outperform prosocial incentives, in the context of customer referral rewards, prosocial incentives can be more effective. Companies frequently offer “selfish” (i.e., sender-benefiting) referral incentives, offering customers financial incentives for recruiting new customers. However, companies can alternatively offer “prosocial” (i.e., recipient-benefiting) referral incentives. In two field experiments and an incentive-compatible lab experiment, recipient-benefiting referrals recruited more new customers than sender-benefiting referrals. In five additional experiments, we test a process account that invokes two countervailing forces: reputational benefits and action costs. First, at the referral stage, senders anticipate reputational benefits for referring when recipients receive a reward. As a result, recipient-benefiting referrals are just as effective as sender-benefiting referrals at this stage. Second, at the uptake stage, recipient-benefiting referrals are more effective than sender-benefiting referrals: recipient-benefiting referrals directly incentivize uptake (i.e., signing up for a new product or service), which is a high-effort action in referral programs. The preponderance of sender-benefiting (vs. recipient-benefiting) referral offers in the marketplace suggests these effects are unanticipated by marketers who design incentive schemes.

Why Prosocial Referral Incentives Work: The Interplay of Reputational Benefits and Action Costs

Selfish incentives typically outperform prosocial incentives, and customer referral programs frequently use such “selfish” (i.e., sender-benefiting) incentives to incentivize current customers to recruit new customers. However, in two field experiments and a fully incentivized lab experiment, this research finds that “prosocial” (i.e., recipient-benefiting) referral incentives recruit more new customers. Five subsequent experiments test a process account for this effect, identifying two key psychological mechanisms: reputational benefits and action costs. First, at the referral stage, senders (existing customers) anticipate reputational benefits for referring recipients (potential new customers), who receive a reward for signing up. These reputational benefits render recipient-benefiting referrals just as effective as sender-benefiting referrals at the relatively low-cost referral stage. Second, at the uptake stage, recipient-benefiting referrals are more effective than sender-benefiting referrals: recipient-benefiting referrals directly incentivize recipients to sign up, providing a clear reward for an otherwise costly uptake decision. The preponderance of selfish, or sender-benefiting, referral incentives in the marketplace suggests these effects are unanticipated by marketers who design incentive schemes.

Defeat the Peak: Behavioral insights for electricity demand response program design

Electric utilities and regulators primarily rely on rate design strategies and economic incentives to achieve customer load malleability at the residential level. However, demand-side management strategies are broadening to incorporate new motivational cues based on pro-social impulses to reduce negative environmental impact and contribute meaningfully to local communities. This evolving relationship between residential customers and utilities is explored to better understand the potential for load malleability achieved through non-economic incentive structures and rate design. Following a review of interdisciplinary perspectives on pro-social behavior and utility demand-side management strategies, we analyze the impact of a pro-social demand response program on the energy use of over 16,000 households served by a municipally owned electric utility in Burlington, Vermont, USA. Results indicate that the program achieved a 13.5% decrease in energy use during the peak annual event in August 2018 with a return on investment of 11 to 1 for the distribution utility. This study builds on the work of other researchers studying individual energy behavior change and supports the argument that pro-social incentives can improve the effectiveness of demand response programs.

Corporate Governance and Social Impact of Non‐Profits: Evidence from a Randomized Program in Healthcare in the Democratic Republic of Congo

How can non-profit organizations improve their governance to increase their social impact? This study examines the effectiveness of a bundle of governance mechanisms (consisting of pro-social incentives and auditing) in the context of a randomized governance program conducted in the Democratic Republic of Congo's healthcare sector. Within the program, a set of health centers were randomly assigned to a governance treatment while others were not. We find that the governance treatment leads to i) higher operating efficiency and ii) improvements in social performance (measured by a reduction in the occurrence of stillbirths and neonatal deaths). Furthermore, we find that funding is not a substitute for governance—health centers that only receive funding increase their scale, but do not show improvements in operating efficiency nor social performance. Overall, our results suggest that corporate governance plays an important role in achieving the non-profits' objectives and increasing the social impact of the funds invested.

Winner Take All or Play it Safe? Effect of Loss Aversion and Prosocial Motivations on Choice of Incentive Structure

We investigate the interaction effects of prosocial incentives and loss aversion on entry into and performance within competitive environments within the context of a real-effort experiment. When competing in the gain domain, individuals are less likely to enter into a competitive winner-take-all tournament if they are competing for a prosocial cause versus for themselves. When individuals are given a resource endowment up front and real losses are incurred, we find the opposite effect, individuals are more likely to enter competition for a prosocial cause than for themselves. These findings add to extant literature on prosocial incentives and competitive entry, which have mainly focused upon incentives that are framed as gains. This study contributes to the strategic human capital literature by investigating the differential effects of pecuniary incentives and productivity and provides implications for organizations in how they incentivize and develop human talent.