Too Much of a Good Thing

The positive influence of good examples appears undisputed. Companies feature an Employee of the Month to motivate other employees. In fundraising and crowdfunding, positive examples are cited to motivate potential donors to give. A study conducted by WHU – Otto Beisheim School of Management, however, shows that in good examples, less is sometimes more.

Copyright: Brian Jackson/Fotolia

Assistant Professor for Business Economics Dr. Rainer Michael Rilke (WHU) conducted a study on behavioral economics with scientists of the University of Cologne and the Technical University of Munich. The economists had the participants of the study interact with each other repeatedly in groups over a certain period of time. In the process, the participants found themselves in the Prisoner’s Dilemma, which also often occurs for employees in teams or potential donors: For the group or the project, it is better for all members of the group to contribute; for the individuals, however, it is better to rely on others, to do less and contribute nothing. It is exactly at this point that good examples can be helpful.

Over the period of the study, the scientists repeatedly gave the participants information about the behavior of the group member who had contributed the most to the joint project. In the process, some participants received the information that they were seeing the behavior of the best group member. Other participants were only given the information that they were seeing the behavior of a group member, but were not told that it was the best group member.

However, the good examples did not always have the desired effect. If the participants were informed that it was a good example, most participants reduced their contributions. If the participants received less information, which is to say that they were not informed that it was a good example, they increased their contributions for the good of all. It appears that less is sometimes more.

Why? One reason is the following: When the participants knew that it was a good example, it caused them to contribute somewhat less to the common good than the good example. If all participants in the group followed this consideration, a downward spiral would result, and contributions would continuously decrease over time. When the participants did not know that it was a good example, the participants tended to imitate it and contributed more to the common good.

The results of the study could be used in many ways, as they illuminate typical human behavior. Crowdfunding or fundraising platforms on the Internet that try to motivate donors with examples of previous donors should realize that this will not necessarily lead to more donations. The balance between the informational content of the given feedback and the degree of transparency determines the resulting incentive.

The scientific study was conducted in collaboration by Assistant Professor for Business Economics Dr. Rainer Michael Rilke (IHK Chair of Small and Medium-Sized Enterprises, WHU), Professor Dr. Bernd Irlenbusch (Faculty of Economics and Social Sciences, University of Cologne), and Dr. Gari Walkowitz (TUM Technical University of Munich & Center Digitization).

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