Florian Pethig (Universität Mannheim): Unexpected Monetary Incentives and User-generated Content on Digital Platforms

Abstract:
Digital platforms frequently use monetary rewards to incentivize the production of user-generated content (UGC). We leverage data from deal-sharing platforms that awarded users who posted the most popular contributions per day. An important caveat of our setting is that the incentive scheme was never publicly announced by the platforms. Instead, recipients were informed by platform representatives, who disclosed the reward and the rules of the scheme. Thus, the scheme endogenously sorted users into informed users who could compete for future rewards and uninformed users who remained unaware of the scheme. Our preliminary results suggest that informed users increased the number of contributions and their votes on others’ contributions, suggesting an increase in motivation to engage with the platform. However, informed users were also more likely to downvote others’ contributions. We argue that the incentive scheme might have inadvertently increased competition among its users with potentially unintended negative effects.