Not Wanting to Miss Out. Why 1 + 1 Sometimes Equals More Than 2

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By: Steve Martin

As any good economist will tell you, people respond to incentives. But as a behavioral psychologist will also point out, peoples’ responses to incentives will be influenced as much by the context in which an incentive is presented, as what’s actually on offer. For example, people are generally more persuaded by the thought of avoiding a loss of something than gaining the exact same thing. In the arena of loss versus gain, what is the same economically becomes very different psychologically.

Timing can provide an important context too. Studies have shown our tendency to live for today at the expense of tomorrow. Offered a choice between $20 today or $22 tomorrow, most will take the money now. Change the context though – $20 in a week’s time or $22 in eight days – and more people will wait the extra day for the bigger reward and, in doing so, demonstrate how frustratingly inconsistent human decisions and behavior can sometimes be.

So when it comes to using incentives to influence behaviors, context (such as a loss versus gain frame or timing of the reward) matter. A lot! And according to new research, so does how you categorize incentives. It seems that separating incentives into different categories can motivate more people to acquire them – even if those categories are meaningless!

Scott Wiltermuth from the University of Southern California and Francesca Gino at Harvard University wanted to see if people’s motivation to achieve a reward could be affected by the category in which the reward was placed. Their research into the matter is published in the latest edition of the Journal of Personality and Social Psychology.

In one of their studies, participants were randomly assigned to two groups and asked to complete a simple 10-minute writing task in exchange for a reward.  The possible rewards consisted of a mix of inexpensive items displayed in two large plastic containers from which participants could choose one reward.  All participants were told that if they (voluntarily) chose to continue working and completed a second 10-minute task—therefore working a total of 20 minutes—they could chose a second item from the available rewards.

Unbeknownst to the participants there was one important difference in the information given to the two groups. The first group was told that if they completed the additional writing task, they could take any two rewards from the containers. The second group was also told that if they completed the additional task, they could take a second reward but that the two rewards they selected would have to come from different containers, because the containers contained “two categories of rewards.”  

iStock_000017258051MediumRemarkably, despite the fact that all the participants clearly saw that the two containers contained the same mix of items, those in this second group were three times more motivated to complete the additional task than were those in the first group. Perhaps even more surprising was the fact that enjoyment of the writing tasks was significantly higher among the participants who were told they could choose from two categories rather than one.

So why did the prospect of receiving rewards from two categories energize people to a greater extent than did the prospect of receiving the same number and value of rewards from only one category? And be happier to do so?

Well, according to Wiltermuth and Gino, dividing the rewards into categories (even meaningless and inconsequential ones) made people feel that they would be “losing out” on something (one of the categories) if they didn’t complete the additional task. Thus, when seeking to influence people to complete tasks by offering incentives or rewards, separating those incentives or rewards into different categories can, without increasing their economic value, increase their psychological value—because of people’s desire to avoid missing out. Cialdini’s principle of scarcity in action!  

These findings could provide useful insights to anyone who has an interest in, or a responsibility to motivate others through the use of incentives. For example a sales manager tasked with motivating employees through a new sales incentive or bonus scheme could optimize the scheme by (1) offering rewards that fall into two distinct categories and (2) allowing employees access to the second category of rewards only after they have earned one from the first.  Not only would such an arrangement encourage employees to expend the efforts to attain both types of rewards, it might even lead them to enjoy those efforts more in the bargain.

Discussion questions:

What other opportunities do you think exist to ethically influence behaviour by changing the way incentives are presented?

Which incentives or reward schemes have been particularly effective at influencing you to complete a task or make a purchase?

Source:

Wiltermuth, S. S., & Gino, F. (2012). “I’ll Have One of Each”: How Separating Rewards Into (Meaningless) Categories Increases Motivation. Journal of Personality and Social Psychology, Vol 104(1), 1-13

  • Bob Sommers

    Great article. I have an application for it on a service I’m currently marketing. Thank you.

    • http://www.influenceatwork.co.uk/ Steve_Martin

      Hurrah! Thats good to hear. Steve

  • Charles Otstott

    My referral program offers, 1 referral first list of gifts on the 2nd referral moves you to a differant level of gift and so on. Would you say this is what you are talking about.

    • http://www.influenceatwork.co.uk/ Steve_Martin

      Hi Charles,
      Quite possibly Yes but without knowing the specifics of the rewards on offer its hard for me to say. What this study is saying is regardess of the rewards themselves (e.g. even if they are all the same) people are motivated to achieve them when they are split into categories, even arbitary ones.
      Thanks for commenting on the IIR.
      Steve

  • Andy Iskandar

    I wonder if creating a 3rd category of incentives will boost response further?

    • http://www.influenceatwork.co.uk/ Steve_Martin

      Good question Andy. In the studies they did test another condition where there were four categories of incentive but that was less motivating when someone could only win two rewards. So its not about the number of categories per se and instead what stands to be lost. If you have three categories but can only win two rewards then thats not going to be very effective becuase you can’t win all the rewards and so there is nothing to be lost. If however there’s a chance to win three rewards then fine.
      Basically match the number of rewards exactly to the number of categories.
      Hope this helps. Steve

      • Aaron Madsen

        If the 3rd category was also an increase in the amount of reward offered to the additional task participants. Would that in itself increase the response rate of for the additional task? So, first task = 1 reward from 1 category. Additional task = 2 rewards, 1 from each remaining category.

  • Deepak

    Great article! The concept can be universally used at both work and home.

  • WB

    Thanks for the information. It is always hard to convince members and guests to attend our monthly meetings of the American German Business Club in Bonn, Germany. Our next speaker is our new US Consul General. For Americans living abroad Consul General services are often needed. It is always better to be known by those in charge, especially for visas, commercial, tax and travel information. Hopefully, attendance can be increased by mentioning a lost chance to meet and interact with our new US Consul General in person .

  • 黄武全

    嗯,我是一名中国人,看了影响力这本书感觉太棒了

  • 黄武全

    不过我不知道要怎么样才可以应用到现实生活里,请赐教

  • Vinay Cardwell

    This very much reminds me of the Let’s Make a Deal show. If I already got one prize and it was easy to do the 10 minutes…how difficult would it be to do 10 more minutes for another prize. The fear of loss is greater than the fear of gain. I may lose out if I don’t do this again especially if it’s something in the box.

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