Aim high or play safe? Commitment, prosocial incentives, and goal setting

Abstract

Abstract We examine how behavioral incentives affect goal setting and performance when individuals choose their own goals. Using a model with reference-dependent preferences and effort cost uncertainty, we predict that commitment mechanisms improve performance by inducing more conservative goal selection to increase goal attainability, whereas prosocial incentives enhance performance by increasing motivation. Two experiments confirm these predictions. In an online real-effort task, soft commitment reduced goals relative to controls but significantly increased performance, whereas prosocial incentives, in the form of charitable donations contingent on goal achievement, preserved goal ambition and improved performance without lowering goals. A four-week field experiment in which students set daily exercise goals yields similar results: commitment lowered goals while increasing performance, whereas prosocial incentives maintained ambitious goals and improved outcomes. These effects persisted throughout the experiment. These findings highlight that, under effort cost uncertainty, commitment and prosocial incentives improve performance through distinct mechanisms.