By: Steve Martin
As any good economist will tell you, people respond to incentives. But as a behavioral psychologist will also point out, peoples’ responses to incentives will be influenced as much by the context in which an incentive is presented, as what’s actually on offer. For example, people are generally more persuaded by the thought of avoiding a loss of something than gaining the exact same thing. In the arena of loss versus gain, what is the same economically becomes very different psychologically.
Timing can provide an important context too. Studies have shown our tendency to live for today at the expense of tomorrow. Offered a choice between $20 today or $22 tomorrow, most will take the money now. Change the context though - $20 in a week’s time or $22 in eight days - and more people will wait the extra day for the bigger reward and, in doing so, demonstrate how frustratingly inconsistent human decisions and behavior can sometimes be.
So when it comes to using incentives to influence behaviors, context (such as a loss versus gain frame or timing of the reward) matter. A lot! And according to new research, so does how you categorize incentives. It seems that separating incentives into different categories can motivate more people to acquire them – even if those categories are meaningless!
Scott Wiltermuth from the University of Southern California and Francesca Gino at Harvard University wanted to see if people’s motivation to achieve a reward could be affected by the category in which the reward was placed. Their research into the matter is published in the latest edition of the Journal of Personality and Social Psychology.
In one of their studies, participants were randomly assigned to two groups and asked to complete a simple 10-minute writing task in exchange for a reward. The possible rewards consisted of a mix of inexpensive items displayed in two large plastic containers from which participants could choose one reward. All participants were told that if they (voluntarily) chose to continue working and completed a second 10-minute task—therefore working a total of 20 minutes—they could chose a second item from the available rewards.
Unbeknownst to the participants there was one important difference in the information given to the two groups. The first group was told that if they completed the additional writing task, they could take any two rewards from the containers. The second group was also told that if they completed the additional task, they could take a second reward but that the two rewards they selected would have to come from different containers, because the containers contained “two categories of rewards.”
Remarkably, despite the fact that all the participants clearly saw that the two containers contained the same mix of items, those in this second group were three times more motivated to complete the additional task than were those in the first group. Perhaps even more surprising was the fact that enjoyment of the writing tasks was significantly higher among the participants who were told they could choose from two categories rather than one.
So why did the prospect of receiving rewards from two categories energize people to a greater extent than did the prospect of receiving the same number and value of rewards from only one category? And be happier to do so?
Well, according to Wiltermuth and Gino, dividing the rewards into categories (even meaningless and inconsequential ones) made people feel that they would be “losing out” on something (one of the categories) if they didn’t complete the additional task. Thus, when seeking to influence people to complete tasks by offering incentives or rewards, separating those incentives or rewards into different categories can, without increasing their economic value, increase their psychological value—because of people’s desire to avoid missing out. Cialdini’s principle of scarcity in action!
These findings could provide useful insights to anyone who has an interest in, or a responsibility to motivate others through the use of incentives. For example a sales manager tasked with motivating employees through a new sales incentive or bonus scheme could optimize the scheme by (1) offering rewards that fall into two distinct categories and (2) allowing employees access to the second category of rewards only after they have earned one from the first. Not only would such an arrangement encourage employees to expend the efforts to attain both types of rewards, it might even lead them to enjoy those efforts more in the bargain.
What other opportunities do you think exist to ethically influence behaviour by changing the way incentives are presented?
Which incentives or reward schemes have been particularly effective at influencing you to complete a task or make a purchase?
Wiltermuth, S. S., & Gino, F. (2012). “I'll Have One of Each”: How Separating Rewards Into (Meaningless) Categories Increases Motivation. Journal of Personality and Social Psychology, Vol 104(1), 1-13