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Social Norms and Market Norms in Online Communities

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Dan Ariely is everywhere.  The Duke University behavioral economist spoke at the AMA MR Boston conference a few weeks ago.  I heard him on Marketplace a few nights ago (Why Main Street hates Wall Street).  Thursday, he won an Ig Nobel award for research that showed that patients respond better to more expensive fake medicines than to inexpensive fake medicines.  And I was in the middle of his book, Predictably Irrational: The Hidden Forces That Shape Our Decisions, before going to the AMA show.

So what does Dan have to say about behavioral economics that we should keep in mind when designing online communities?  Predictably Irrational's Chapter 4, "The Cost of Social Norms: Why We Are Happy To Do Things, but Not When We Are Paid To Do Them", is particularly relevant.  I'll let Dan summarize it:

Dan conducted a number of experiments into the world of social norms vs. the world of market norms.  In one experiment, three groups did a 5-minute task on a computer, dragging circles into a square.  One group did it as a favor to the experimenter, one group was paid $5 and the third group was paid 50 cents.  The 50-cent group was less productive than the $5 group.  But the people who did the task as a favor were the most productive of all!  In case this artificial experiment is not convincing, Dan also gave real-life examples, including military service and the pro bono work of lawyers. Perhaps a community driven by social norms will provide better insights than a community driven by market norms (incentives).

When creating a new community, it is important to determine whether the community will operate in the world of social norms or market norms.  Will you pay community members for their participation and award them for greater participation or will the only rewards be social rewards (recognition, shared insights, learning)?

You'll need to determine the nature of your community up front, because once a community founded on social norms introduces any market norm (such as incentives for participation), that community now shifts to a market-norm basis.  You can't go home again, once you've been downtown.  Dan gives the example of a daycare facility that originally didn't charge parents for picking up their children late.  Introducing a late fee actually caused a jump in tardiness - where parents felt guilty about being late before (operating under social norms), now they felt having their children stay late was just a service they were purchasing (operating under market norms).  The daycare facility later removed the fees, in an effort to reduce the amount of tardiness (their goal all along), but lateness levels did not return to their prior state; the conditions of following a market-norm had been set.

The majority of online communities are purely social.  People contribute because of their passion for the topic, their devotion to the product or their loyalty to the brand.  They give feedback, suggestions and ideas because they want to see innovations that support them.  They will sometimes provide incredible detail in terms of reviews and suggestions.  A feedback community operating on social norms is a tremendous asset.

Don't damage that asset by telling people that you will pay them for certain forms of more involved participation.  Instead, send out as a surprise a token of appreciation to community members who have provided a lot of value.  Keep the community from entering market norms by recognizing past contributions, rather than framing gifts as compensation for the next contribution.

For some communities, social norms simply won't work.  Sometimes the only way to recruit members to join the community is to offer them upfront compensation-certain target audiences are simply too busy to respond to anything other than a market-based request:  doctors, lawyers and IT chiefs, for instance.  Sometimes the amount of work expected of members exceeds that of social norms:  excessively long surveys or online focus groups. 

Incentive-based research communities have their place.  One of the communities we've supported for over five years now, with over a quarter-million members, has to use a market economy for participation.  They ask members in excruciating detail about purchases - what was purchased, where it was purchased it, what the cost was, whether or not coupons were used, etc.  They ask for detailed medical histories and pharmaceutical usage.  They routinely run surveys that take 30 to 50 minutes to complete.  Clearly, this level of involvement has to be compensated.  Members are rewarded points every week, just for continuing as a member, and are given different amounts of points for completing different types of surveys.  Points can be redeemed for a variety of awards.

If you already have a community, and it offers incentives, then if you ever stop the incentives you can expect significantly lower participation.  So much so that you might want to consider launching a new, different community instead.

If you already have a community, and it sporadically offers nonmonetary incentives, then you need to determine how much "damage" to the social norm has been done.  If little or no damage, then cease using incentives.  Do provide gifts to significant contributors, simply as a thank you.  If the damage has been done, or the participation rates and recruitment rates are very low, then plan to transition to a full incentive-based community.

If you are planning a new community, and its target audience is plentiful or has a close relationship with your organization, then start with a community founded on social norms.  Recognize outstanding contributors, provide comparative information (how a member's response compare to the communities) and constantly share how your organization is using the feedback gathered.  If your new community is targeted to a hard-to-recruit audience, or if your requirements for community participation are significant, even onerous, then plan to offer a complete line of incentives.

Dan Ariely's dichotomy of social norms and market norms provides community managers with a powerful framework for considering the role of incentives in their online communities.