July 08, 2008
Economics meets social psychology on incentive theory
In another June 2008 American Economic Review article, Ellingsen and Johannesson introduce a standard concept from social psychology into a standard economic model of incentives, and find that it helps explain some well-known empirical puzzles.
This is not at all the first article in the economics literature that explores the role of social motivations, and the authors provide a good discussion of prior work.
"In Pride and Prejudice: The Human Side of Incentive Theory", Ellingsen and Johannesson add two motivational premises to the standard principal-aget model: people value social esteem, and the value they experience depends symmetrically on who provides the esteem: they value esteem more from those who they themselves esteem.
Their main result is to show how an incentive that otherwise would have a positive effect on behavior can have a negative effect for some people because of what the incentive tells the agent about the principal. For example, they suggest this as an explanation for "the incentive intensity puzzle that stronger material incentives and closer control sometimes induce worse performance" (p. 990).
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March 29, 2008
Presentation at Yahoo! Research on user-contributed content
Yahoo! Research invited me to speak in their "Big Thinkers" series at the Santa Clara campus on 12 March 2008. My talk was "Incentive-centered design for user-contributed content: Getting the good stuff in, Keeping the bad stuff out."
My hosts wrote a summary of the talk (that is a bit incorrect in places and skips some of the main points, but is reasonably good), and posted a video they took of the talk. The video, unfortunately, focuses mostly on me without my visual presentation, panning only occasionally to show a handful of the 140 or so illustrations I used. The talk is, I think, much more effective with the visual component. (In particular, it reduces the impact of the amount of time I spend glancing down to check my speaker notes!)
In the talk I present a three-part story: UCC problems are unavoidably ICD problems; ICD offers a principled approach to design; and ICD works in practical settings. I described three main incentives challenges for UCC design: getting people to contribute; motivating quality and variety of contributions; and discouraging "polluters" from using the UCC platform as an opportunity to publish off-topic content (such as commercial ads, or spam). I illustrated with a number of examples in the wild, and a number of emerging research projects on which my students and I are working.
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March 03, 2008
UCC incentives the old-fashioned way
Ben Kaufman announced Kluster at TED 2008. This is a business through which businesses can solicit user-contributed content: innovative technology or product ideas, business solutions, etc. Why would anyone give a for-profit company good innovation ideas? For a cash incentive...Business post challenges with a cash bonus, and Kluster has a scheme for paying out tha bonus to people whose ideas are successful. (It also runs a prediction market on the side for wagers on which of the proposed ideas will succeed.) No volunteers here: this UCC is compensated in the traditional form of tournament prizes.
Two similar businesses, at least, are already operating: InnoCentive and Cambrian House.
Think you're smart, but don't have time or capital to turn your ideas into businesses? Go sell your ideas online!
(Based on reporting in Putting Innovation in the Hands of a Crowd - New York Times)
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March 02, 2008
Looking for (well-paid, highly-trained, very busy) volunteers
The Peer to Patent project is one of my favorite examples of a user-contributed content (UCC) project recently, not because it has been very successful (yet), but because it demonstrates the surprising and important ways that UCC may go to benefit society. It's no all Wikipedia and social networking!
Peer to Patent is a project started by Prof. Beth Noveck and her Do Tank group at NYU Law School. The US Patent Office adopted it for a one-year pilot starting 15 June 2007. It is a system to post patent applications for public comment, in particular seeking suggestions about possible prior art, to assist USPTO examiners determine whether a patent should be granted. It was motivated by a widely held sense, particular in the area of software and business process patents, that the USPTO has been overwhelmed with the number of applications and the advances in technology in recent years, and that many and patents have been granted which can have the effect of stifling new innovation. During the first six months of the pilot, over 1800 people have registered to participate, and over 150 prior art references have been submitted on 24 patent applications that can be reviewed through this system.
In the February 2008 issue of the Communications of the ACM, Andy Oram published a column about the project in which he discussed the incentives challenges that may stand in the way of success. First, of course, not just any user is likely to be able to make quality contributions: to be useful, a contributor must have serious expertise in the area of the patent in order to be able to understand the application well enough to recognize possible prior art, and must know the literature well enough to identify the prior art. That's not a lot of people, and they aren't the type who have a lot of underpaid hours to volunteer. Indeed, he quotes Jon Bentley of Avaya Labs who points out that the whole essence of patenting is making money, and that the people in the best position to contribute may be those least interested in doing so.
One of the hopes of the project is that it is the monetary incentive itself -- not provided by Peer to Patent, but indirectly -- that will induce people to contribute: competitors. That is, if some company is using technology on which a patent is proposed, or is developing something similar, it will have a financial interest in seeing that the patent is not granted. Thus, they might be the ones to put the time in to review the application and propose the prior art. Although they are interested parties, as Oram says "prior art is prior art no matter who finds it".
Interesting problem, and I'm looking forward to seeing whether or not Peer to Patent can succeed (and I hope it does, because I tend to think that too many software and business patent applications are approved).
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January 22, 2008
Tying Odysseus to the mast
There is a well-known, difficult-to-solve motivation problem: keeping a commitment to yourself. Nearly everyone experiences this in one form or another: "I'm going to diet until I lose 25 pounds". "I'm going to get more sleep" (honest, right after I finish typing this post). "I'm never going to smoke another cigarette." .jpg)
In Homer's epic, when nearing the Sirens whose entrancing song would lead men to dash their ships on the rocks, Odysseus had his men tie him to the mast and plug their ears with beeswax so they could hear neither the Sirens, nor his orders to doom them (all of this because he was curious and couldn't resist listening himself!).
There is a well-known story among economists that Nobelist Thomas Schelling advised those who wanted to diet: "Write a large check to the American Nazi Party and put it in an addressed envelope. When you break your diet, mail it." (Steven Levitt writes that he heard the advice first-hand.) This sensible scheme to increase our incentives to stick with a commitment suffers the problem of a bit of circularity: if you decide to break your diet (or other) commitment, what is to stop you from breaking your commitment to mail the check?
Yale economists Ian Ayres (a classmate of mine while getting our Ph.D.s) and Dean Karlan (also an MIT grad) have started a Web-based company to help implement this tempting but difficult to implement scheme: StickK.com. The scheme is pretty simple: mail them the check and they will hold it in escrow, and if you break your commitment will mail it for you.
"But what", you say, "will force me to let them know I broke my commitment"? Here's where the time-honored mechanism of a trusted-third party referee comes in: set up your commiment in a way that can be verified, and then have a friend or other trusted third-party monitor you, and agree to notify StickK.com if you break your promise.
(Yes, yes, of course: what's to stop you from offering your buddy half of the money if she doesn't report you? Isn't recursion fun?)
This is a fun example of a principal-agent problem: you are the principal and the agent, and you have what amounts to a hidden action problem. That is, you cum principal can't enter an enforceable contract with you the agent to ensure performance because the agent can take an "unobservable" action: instructing you the principal to not enforce. The third-party mechanism transforms this into a symmetric information problem with verifiable, enforceable action.
(Thanks to Buzzy Nielsen for pointing me at StickK.com.)
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January 13, 2008
All user-contributed, all the time (almost)
I've been fascinated for the past couple of years with businesses that rely on user-contributed content (UCC) for substantial inputs to production. It is sometimes jokingly referred to as the "Tom Sawyer business model": get your friends to whitewash the fence for you, without paying them (in fact, they paid Tom quite handsomely, including "a key that wouldn't unlock anything, a fragment of chalk...and a dead rat on a string"). 
Randall Stross writes in today's New York Times about two fairly well-known businesses that have nearly perfected the art: Plenty of Fish, and Craigslist. Craigslist is a wide-open classified advertising service where employers post jobs, homeowners sell their old "Monopoly -- Star Wars Version" games and unwanted gifts, and, most piquantly, people of every shape, age, color and preference seek partners for a nearly infinite variety of polymorphously perverse, chaste and romantic interactions. Craigslist is one of the top 10 visited English language sites, has versions for 450 localities in over 50 countries, and runs with only 25 employees. All of the content is written, edited (such as it is) and maintained voluntarily by users; user volunteers also provide most of the customer service through help forums.
Plenty of Fish is more specialized and not quite as successful, but perhaps more remarkable. It is a dating service localized to 50 Canadian, US and Australian cities. Markus Frind created it and devotes only about 10 hours a week to running it...and he only in the past year hired his first employee. Yet the site has 600,000 registered users (which grows rapidly despite purging 30,000 inactives a month), and receives 50,000 new photos per day. Spam-filtering of text is done by software. Filtering of photos (to make sure they are human and clothed) is done by user volunteere: in the past year the top 120 volunteers scanned over 100,000 photos each! The users provide the customer service too, through help forums.
Great business model: have the users whitewash the fence, and you work 10 hours a week for $10 million in annual profits (Stross estimates that Frind's claim about his advertising-only profits is plausible). What are the generalizable principles. How can *I* start such a business and succeed (the road is littered with UCC-driven businesses that never turn a profit).
It is obvious that one of the most important questions is why? Why would users volunteer the time and effort to provide the content, the customer service, the photo filtering, etc.? You may think it's obvious why users want to visit Plenty of Fish: there are a lot of lonely hearts out there. And it is 100% free to users: Frind only charges advertisers. Of course, without user effort, it won't succeed: there will be no information about potential life partners, no help information, and lots of undesirable photos polluting the service. But no individual user needs to contribute anything: there is no requirement for volunteer hours (as there is at our local food coop), there is no public tracking of effort and peer pressure to pull your weight. It's a free-rider's dream.
Contributing content is easy: if you don't submit a profile you aren't going to get any dates. But what about photo scanning? Yes, you want to scan photos anyway: that's why you're there. But why not let someone else filter out the junk so you only have to filter the worthwhile photos? Is there that much of a first-mover advantage that you are willing to filter 100,000 photos per year to have a shot at being the first to contact the newest hunk? My guess is that the expected return on that investment is pretty low.
And why spend your time providing free help service to other users? Maybe Plenty of Fish is lucky to have a demographic for whom the value of time is unusually low (lonely single people with nothing else to do on Saturday night), but that just means the cost is lower to make the contribution: what is the benefit? Is it that the volunteer helpers are trying to be noticed as helpful, well-informed web geeks as a way of attracting dates?
I think the answers to these questions are transparently not obvious. If the answers were easy, we'd have a lot more people working 10 hours a week to make $10 million per year. And the answers are not likely to be something that involves only traditional economic views about incentives and motivations. Developing generalizable principles about the motivations for user-contributed content will surely need to draw on psychological explanations as well, from the psychology of personality and self, and social psychology (at least).
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December 19, 2007
Psychology of motivation
I today attended a continuing education class for librarians at our university on "Motivation in the Classroom". It was taught by two psychology professors who had specialized throughout their careers (they are emeriti now) on psychology and teaching. I thought this might be an opportunity to learn more about psychological theories of motivation, and get some ideas of new ways to provide incentives in design to motivate people interacting with technology or with each other through technology.
The assigned reading was a nice introduction: "Motivation in the Classroom", by Barbara K. Hofer, in W. McKeachie and M. Svinicki, McKeachie's Teaching Tips: Strategies, Research, and Theory for College and University Teachers, 12th ed. (Houghton Mifflin, 2005).
Hofer writes:
Researchers typically consider three indices of motivation: choice, effort, and persistence; achievement is an outcome of these variables. Accordingly, students who are motivated to learn choose tasks that enhance their learning, work hard at those tasks, and persist in the face of difficulty in order to attain their goals.
She then suggests that many human beings have a fundamental need for autonomy and self-determination (citing Deci & Ryan, 2000), and thus, by offering meaningful opportunities for choice and by otherwise supporting autonomy, we might increase their motivation.
She cites Ryan & Deci (2000) on research indicating that providing external rewards (extrinsic motivation) may diminish intrinsic motivation by undermining self-determination, though she thinks that on balance recent research supports a mix of intrinsic motivation and external rewards.
She then discusses expectancy theory. Citing Wigfield & Eccles (2000), people
direct their behavior toward activities that they value and in which they have some expectancy of success.
In a loose sense, motivation is the product of these two factors (if one is absent, the motivation is zero).
Motivated behavior is directed towards goals. Hofer identifies two types of goals especially pertinent to teaching: mastery and performance goals. Mastery goals concern a desire to learn and understand the material. Performance goals concern a desire to perform well relative to one's peers (e.g., if the course is graded on a curve). It's not immediately obvious to me how to use this distinction in incentive-centered design, but she suggests various implications for teaching to students of one type versus the other.
When individuals experience an unexpected outcome, they seek to explain it by making attributions about the probable causes. Hofer cites Weiner (2001) to suggest that attributions can be characterized along three dimensions: locus, stability and responsibility referring respectively to whether the cause is internal or external, stable, controllable. When someone explains a negative outcome with internal, controllable attributions ("I know I didn't prepare adequately for the test") she is likely to be motivated to do what it takes to do better next time. If she uses a stable, uncontrollable cause ("I will never understand statistics") she will probably be less motivated to change. Thus, for example, providing system feedback that guides users to attribute problems to internal, controllable causes is more likely to motivate them to improve.
Hofer also briefly discusses social motivations, drawing on social psychology. For example, she suggests people want to be socially responsible and form social relationships with peers (citing Patrick et al. 1997; Wentzel & Wigfield, 1998).
Hofer then offers a number of recommendations specific to teaching, which are too specific to that context for me to include here, but which exemplify ways in which these psychological principles of motivation can be incorporated in design.
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