Does Money Talk? The Impact of Monetary Incentives on User-Generated Content Contributions

Yuewen Liu () and Juan Feng ()
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Yuewen Liu: Department of Information Management and E-Commerce, School of Management, Xi’an Jiaotong University, Xi’an 710049, China
Juan Feng: Department of Management Science and Engineering, School of Economics and Management and Shenzhen International Graduate School, Tsinghua University, Shenzhen 518071, China

Information Systems Research, 2021, vol. 32, issue 2, 394-409

Abstract: Many platforms use monetary incentives to encourage user-generated content (UGC) contributions. However, empirical studies report contradictory findings: monetary incentives may either increase or decrease contribution. To understand the underlying mechanisms, we build a theoretical model where four types of contributors (classified by whether they contribute without monetary incentive and whether they are effective in attracting audience) compete for the audience. We identify two crowding out effects: (1) motivation crowding out , where the introduction of a monetary incentive reduces the non–money-driven contributors’ motivation to contribute (e.g., contributors may worry that they would be viewed as greedy), so they reduce their effort or even stop contributing; and (2) competition crowding out , where the low-effectiveness contributors reduce their effort or even stop contributing because of intensified competition when the monetary incentive increases. Under the influence of these two crowding-out effects, the impact of a monetary incentive on the contributors’ participation and on their total content volume is not monotonic. As a result, different equilibrium outcomes emerge as the monetary incentive increases. We also extend our model to the case where the number of contributors in each type could be different and identify more complicated crowding-out phenomena. Our findings offer guidelines for designing monetary incentive schemes for online UGC platforms.

Keywords: user-generated content; monetary incentive; motivation crowding out; competition crowding out (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:orisre:v:32:y:2021:i:2:p:394-409

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