The Nature and Extent of Post-Reward Crowding-Out: The ‘Effort-Balancing’ Account

Abstract

Although incentives can be a powerful motivator of behavior, research on intrinsic motivation has suggested that rewards can crowd-out task interest, reducing engagement when rewards end. This research has resulted in widespread skepticism among practitioners and academics alike about using incentives in interventions. However, recent field studies examining the long-term effects of temporary incentives have not found such effects. We propose a new Effort-Balancing account, which suggests that post-reward crowding-out often represents the need for a ‘break’ after investing effort, rather than a change in interpretation of the task or beliefs about own preferences. As a result, post-reward crowding-out is relatively momentary and consistent with longer-term neutral or positive spillover effects of temporary incentives. We test a series of novel predictions, including that momentary crowding-out will be reduced when efforts are more balanced by rewards (e.g., higher reward magnitude or a less effortful activity) or when people are given a break. The implications of momentary crowding-out for long-term behavior and design of incentive programs are discussed.