The creation and sharing of user-generated content such as product reviews has become increasingly “social,” particularly in online communities where members are connected. While some online communities have used monetary rewards to motivate product review contributions, empirical evidence regarding the effectiveness of such rewards remains limited. We examine the possible moderating effect of social connectedness (measured as the number of friends) on publicly offered monetary rewards using field data from an online review community. This community saw an (unexpected) overall decrease in total contributions after introducing monetary rewards for posting reviews. Further examination across members finds a strong moderating effect of social connectedness. Specifically, contributions from less-connected members increased by 1,400%, while contributions from more-connected members declined by 90%. To corroborate this effect, we rule out multiple alternative explanations and conduct robustness checks. Our findings suggest that token-sized monetary rewards, when offered publicly, can undermine contribution rates among the most connected community members. Data and the online appendix are available at https://doi.org/10.1287/mksc.2016.1022

Are romance movies more desirable when people are cold? Building on research on (bodily) feeling-as-information and embodied cognition, we hypothesize that physical coldness activates a need for psychological warmth, which in turn leads to an increased liking for romance movies. Four laboratory experiments and an analysis of online movie rental data provide support for our hypothesis. Specifically, studies 1A and 1B show that physical coldness increases the liking of and willingness to pay for romance movies. Study 2 shows that the effect of physical coldness on liking of romance movies only occurs for people who associate romance movies with psychological warmth. Study 3 shows that people correct for the influence of physical coldness on their liking of romance movies when physical coldness is made salient. In study 4, using data on online movie rentals and historical temperature, we found a negative relationship between weather temperature and preference for romance movies.

We estimate the joint impact of the frequency reward and customer tier components of a loyalty program on customer behavior and resultant sales. We provide an integrated analysis of a loyalty program incorporating customers' purchase and cash-in decisions, points pressure and rewarded behavior effects, heterogeneity, and forward-looking behavior. We focus on four key research questions: (1) How important is it to combine both components in one model? (2) Does points pressure exist in the context of a two-component loyalty program? (3) How is the market segmented in its response to the combined program? (4) Do the programs complement each other in terms of the incremental sales they produce? Our most basic message is that the frequency reward and customer tier components of loyalty programs should be modeled jointly rather than in separate models. We find strong evidence for points pressure for both the customer tier and frequency reward components using both model-based and model-free evidence. We find a two-segment solution revealing a “service-oriented” segment that highly values cash-ins for room upgrades and staying in “luxury” hotels, and a “price-oriented” segment that is more price sensitive and highly values the frequency reward aspects of the loyalty program. Furthermore, we find that both components generate incremental sales. Also, there was slight synergy between the programs but not a huge amount. Overall, each component contributes to increased revenues and does not interfere with the other.

A little-understood phenomenon of customer reward programs is the prevalent use of finite reward expiration terms. We develop a theoretical framework to investigate the economic rationale behind this phenomenon and the trade-off between short and long expiration terms. In our model, a monopolistic firm sets the expiration term, along with the price and reward size, and interacts with consumers over an infinite horizon. Consumers are heterogeneous in shopping probabilities and product valuations and forward-looking in making purchase decisions. We find that a customer reward program with a finite expiration term can increase firm profits when (i) the valuation difference within the consumer population is intermediate and (ii) the shopping probabilities and valuations are negatively correlated among consumers. Several model extensions confirm the robustness of these results. Finally, we conduct an empirical investigation on the reward program practice of the top 100 U.S. retailers, which provides directional support for several key theoretical predictions. This paper was accepted by Gad Allon, operations management.