The Performance Effect of Goal-Based Prosocial Rewards: Does Reward Size Matter?

In recent years the use of performance-contingent prosocial rewards, where employees must give their reward to a charity or a coworker, has become more common. Using a piece-rate incentive structure, prior research shows small dollar prosocial rewards lead to greater performance than small dollar cash rewards, but this effect diminishes when the reward size increases. We extend this research by examining the motivating effect of prosocial reward under a common goal-based incentive structure. Our experiment uses an effort-sensitive task and participants are rewarded for the attainment of a challenging performance goal. We use a 2 by 2 between-subjects design where we manipulate the type of reward for goal attainment (cash vs. prosocial) and the size of the reward (small vs. large). We find that goal-based prosocial rewards result in higher performance than goal-based cash rewards when the reward size is small, but this performance advantage is not observed when the reward size is large. We also find that the affective value individuals attach to goal attainment mediates our results, and that the performance advantage of small goal-based prosocial (vs. cash) rewards is mainly driven by low-performing participants. Implications for theory and practice are discussed.