Does Crowdsourcing Need a Cash Prize to Work?

30 April, 2019 / Articles

A few years ago, Frito-Lay announced a $1 million prize for the winner of a contest to come up with a new potato-chip flavor. Around the same time, Knorr, the soup company, offered 2,500 euros for the person who came up with a “revolutionary hot savory snack.” Starbucks, meanwhile, solicited customers for new ideas, improvements to existing products, and requests to bring back products that Starbucks had dropped but didn’t offer a prize.

Assuming that the companies’ goal was to encourage consumers to come up with the most creative ideas possible — whether that’s an idea for a breakthrough chip flavor, deep-fried wasabi finger sausages, or a caffeinated beverage that goes beyond the Frappuccino — which company was doing the right thing in terms of the amount of the reward that it offered? Given consumer product companies’ growing reliance on crowdsourced product ideas, the answer matters.

Many psychologists would put their money on Starbucks’ empty cup. A number of studies have shown that offering monetary rewards reduces people’s intrinsic interest in a project and lowers interest tends to curb creativity. For business executives, however, the answer isn’t as clear-cut.

To try to settle this question, we set up an experiment.

One of us (Oguz) recruited 302 adults (142 female) from Amazon Mechanical Turk, an online crowdsourcing platform for human intelligence tasks, and asked them to complete an unrelated filler task (a survey about their thoughts and beliefs) in exchange for a small payment.

Once the participants had answered the questions in the filler task, they received a note indicating that the task was over and that they would receive their payment. At the end of the note, they were also invited to participate in an idea-generation task to come up with an idea for a new flavor for potato chips, a task  modeled on Frito-Lay’s “Do Us a Flavor” contest.

Participants were randomly assigned to receive one of three versions of the invitation, each with a different set of rewards. All the information was identical, except that in the low- and high-reward conditions, participants were given additional information specifying the amount they could potentially win. No such information was provided to those in the no-reward condition.

People in the low-reward category were informed that they stood a chance to win either a $25 (first prize), $10 (second prize), or $5 (third prize). Those in the high reward category were told that they could win $250 (first prize), $100 (second prize), or $50 (third prize).

After they had been given this information, participants were asked whether they wanted to participate. A total of 145 participants (79 of them were females) decided to take part, and 141 of them (77 of them female) submitted at least one idea. Participants were told that the three top ideas would be selected as winners, and that they were free to submit as many ideas as they wished. To determine the top ideas, we recruited five independent consumer judges and asked them to evaluate the ideas both on originality (perceived novelty of the potato chip flavor) and usefulness (potential tastiness of the potato chip flavor). We then calculated an originality and usefulness score for each idea by averaging the responses of the judges.

Once we analyzed the responses, we found that:

  • Offering a high reward encouraged more consumers to take part in the contest. Compared to no reward and a low reward, the prospect of a high reward increased participation by 69% and 42%, respectively.
  • Compared to a low reward, offering a high reward led to the submission of ideas that judges rated, on average, 13% more original. Surprisingly, however, offering no reward attracted ideas that the judges scored 16% higher, on average, for originality than those generated by offering a low reward.
  • Offering a high reward led to ideas that scored, on average, 12% higher in terms of usefulness than those from contributors who were offered no reward and 13% higher than those from people offered a low reward. In addition, offering no reward had no effect on the usefulness of the ideas submitted compared to offering a low reward.
  • In contrast to no rewards and high rewards, a low monetary reward appeared to offer the worst of both worlds: It discouraged submissions and lowered the level of originality of those submitted.

One potential explanation for this last finding is that offering a monetary reward might alienate consumers who would otherwise be intrinsically motivated to participate in the contest by prodding them to think about the task in extrinsic terms — basically, encouraging them to think that instead of a fun game they were signing up to a badly paying job.

The results of the experiment suggest that if you are looking for a larger selection of ideas to choose from, put up a big prize. On the other hand, if you don’t mind a smaller selection of original ideas or don’t have the resources to vet a lot of ideas, offering no prize will work just as well. Low rewards don’t seem to serve any purpose. What is certain: When you do want to offer a reward, you should determine the optimal size by conducting an experiment like ours before launching the full-blown contest.

 The science man and innovator, Fernando Fischmann, founder of Crystal Lagoons, recommends this article.

Harvard Business Review


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