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The dynamic effect of incentives on postreward task engagement

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Although incentives can be a powerful motivator of behavior when they are available, an influential body of research has suggested that rewards can persistently reduce engagement after they end. This research has resulted in widespread skepticism among practitioners and academics alike about using incentives to motivate behavior change. However, recent field studies looking at the longer term effects of temporary incentives have not found such detrimental behavior. We design an experimental framework to study dynamic behavior under temporary rewards, and find that although there is a robust decrease in engagement immediately after the incentive ends, engagement returns to a postreward baseline that is equal to or exceeds the initial baseline. As a result, the net effect of temporary incentives on behavior is strongly positive. The decrease in postreward engagement is not on account of a reduction in intrinsic motivation, but is instead driven by a desire to take a “break,” consistent with maintaining a balance between goals with primarily immediate and primarily delayed benefits. Further supporting this interpretation, the initial decrease in postreward engagement is reduced by contextual factors (such as less task difficulty and higher magnitude incentives) that reduce the imbalance between effort and leisure. These findings are contrary to the predictions of major established accounts and have important implications for designing effective incentive policies to motivate behavior change.
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... Different motivational mechanisms operate not only alone but in combination with each other to influence overall motivation and direct behavior (Schwartz and Wrzesniewski, 2016;Woolley and Fishbach, 2018). One of the main challenges of the motivation literature is to examine the dynamics of such interactions and their effect on overall motivation (i.e., the sum of different types of motivations) and performance (Bonner and Sprinkle, 2002;Cerasoli et al., 2014;Goswami and Urminsky, 2017;Wowak et al., 2017;Woolley and Fishbach, 2018;Hendijani and Steel, 2020). Among these, the combined effect of external reward and choice has been particularly controversial (Patall et al., 2008;Hendijani, 2021). ...
... The results of this study and similar studies in the reward literature highlight the importance of taking a new look at the negative effects of extrinsic rewards as predicted in the undermining literature. That is, if administered properly, even salient external rewards can improve overall motivation and performance (Goswami and Urminsky, 2017;Woolley and Fishbach, 2018;Hendijani and Steel, 2020;Zhang et al., 2020). In fact, under certain conditions as can be seen in this study and previous similar ones (Madan and Spetch, 2012), the salience of the reward rather than its absolute value contributes to performance improvement. ...
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Thesis
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... As for managerial implications, human resource practitioners will gain important insight into the utility (Goswami & Urminsky, 2017), differential effects (Conway et al., 2011), and the magnitude of rewards (Corgnet et al., 2015) in enabling cooperation. It will be useful for them to understand the magnitude of rewards on trust in enabling cooperation. ...
Chapter
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... The effects of providing exceedingly high or low rewards remain unknown, as the authors only tested the provision of an average reward level. Such findings are supported by Goswami and Urminsky (2017) regarding the long-term effect of rewards, and by Lazear (2018) in the workplace. ...
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