Time to Stop? An Empirical Investigation on the Consequences of Canceling Monetary Incentives on a Digital Platform

Abstract

Practice- and Policy-Oriented Abstract Digital platforms commonly use monetary incentives to motivate users to perform specific tasks. Existing studies have shown the effects of introducing such monetary rewards on task participation and performance on public platforms. However, little is known about the impact of canceling rewards, and particularly less attention is paid to corporate platforms. Our study examines the impact of canceling monetary incentives using quasi-natural experiments on a corporate platform. We find that canceling monetary incentives is not simply the reverse process of their introduction. Specifically, compared with the increase in task participation when rewards were initially introduced, canceling these rewards leads to a sharper decrease in participation. Additionally, although introducing rewards has no significant effect on task performance, canceling rewards causes a significant decline in performance. These results suggest that canceling monetary rewards has a net negative impact on task participation and performance. Furthermore, we examine the heterogeneity of this impact concerning user motivation types and working competency levels. We also discuss the similarities and differences between corporate and public platforms in the impact of monetary incentives. Our results provide important practical implications for enterprise information systems and general information systems regarding their design of incentive strategies.