Can Prosocial Incentives and Self-chosen Goals Improve Performance? An Online Real Effort Experiment

We study incentive schemes that combine self-chosen goals with prosocial rewards. We design a real-effort task experiment with MTurk workers. Upon achieving self-chosen goals, rewards are paid to the worker in the monetary treatments or to charities in the prosocial treatments. To explore the mechanisms whereby rewards can improve performance with prosocial incentives, we develop a theoretical model with goal dependence and earning reference points. Our results show that when rewards are paid to charities, performance improvements happen through workers setting higher goals. This effect is stronger for those whose interests are matched with the charity’s mission. Our findings have important implications for incentivizing workers in the gig economy