1. Introduction
Incentivizing agents to motivate desirable behaviors is at the core of many economic and social activities. Incentives, pecuniary or otherwise, take many forms. This paper focuses on awards, which are widely used but poorly understood (Frey & Gallus, Reference Gallus2017a). Despite a burgeoning literature on awards, our ability to understand their role as incentives is limited by a lack of definition on what counts as an award and what does not, as well as by the lack of a framework mapping the main dimensions that account for their motivational effects.
Our definition of awards situates them within the larger incentives landscape. According to the Oxford English Dictionary (2024), awards are rewards that are conferred for merit. In our context, awards are formal recognitions typically granted by an organization or group, involving an audience of witnesses, with specified criteria and procedures. Awards are characterized by an explicit positive differentiation of a group of recipients, who are often labeled as recipients of said award, from a broader group of non-recipients. Many awards are recurring over time (either regularly or irregularly), and the repeated conferment builds a historical record of recognized individuals, groups, or organizations, enhancing the award’s symbolic value.
The above characteristics distinguish awards from private feedback, praise, thank you notes, informal gestures of recognition (e.g., a spontaneous celebration of someone’s achievements), and performance bonuses (sometimes confusingly referred to as awards). Yet the delineation from other incentives can be difficult, as in the case of fellowships, grants, badges, and certifications. Fellowships and grants blur the boundary because some of them are pure monetary payments that are not premised on the recognition of merit. The widespread and liberal use of these terms necessitates evaluation on a case-by-case basis. Badges are another interesting case, where one distinguishes between badges that function as certifications of having met basic standards (e.g., OSF badges) and those that recognize merit (e.g., Yelp Elites).
This article proposes a three-dimensional framework to systematically analyze the effects of awards, considering the award’s tangible value, the social signals it emits, and its self-signaling function. These dimensions can have negative interactions, for example when an award’s high social signaling value makes the recipient question their own motives for engaging in the behavior. They can also have positive interactions, for example when a higher monetary value helps establish an award by creating more positive social and self-signals. We apply this framework to review empirical studies of awards in the economics, psychology, management, and sociology literatures. This allows us to identify gaps and to propose hypotheses that can be tested in future work.
Our paper makes several contributions. First, we provide a simple framework through which the effects of awards can be analyzed across different organizational contexts. The three dimensions reflect economic, social, and psychological mechanisms. We center our framework on the study of awards as incentives, which differentiates this work from the sociological research on awards that has focused on audience reactions.
Second, prior literature has emphasized the differences between economic incentives and awards (e.g., Frey, Reference Frey2007; Frey & Gallus, Reference Frey and Gallus2016; Gubler et al., Reference Gubler, Larkin and Pierce2016). We differ from this work by including tangibility and thus, economic incentives, as a core dimension of our framework. This allows us to consider the complex interactions between economic mechanisms on the one hand, and social and psychological mechanisms on the other. It also allows us to analyze when and how awards have similar incentive effects as money, and when they serve as complements. Both cases are important for situating awards within the larger incentives landscape.
Third, previous work on the signaling functions of awards has mostly focused on signaling by the organization or by management (Gallus & Frey, Reference Gallus and Frey2017). We adopt a broader perspective on signaling by adding self-signaling as a core dimension for understanding the effects of awards. Our final contribution is to identify important characteristics of awards, which will guide future experimental work on the topic. We elucidate what the main characteristics of awards are (e.g., the selection process, the audience, the giver, the scarcity) and discuss these through the lenses of our framework. By doing so, we provide a template for future studies on awards, which is a topic of growing interest to scholars within and beyond economics. Following in the footsteps of Parco et al (Reference Parco, Rapoport and Stein2002), the framework will allow for future research to make and test predictions across settings, and to systematically vary key characteristics of awards to understand their implications.
More broadly, the paper also contributes to the literature on incentives and motivation. We extend past work regarding when monetary and other tangible incentives backfire (Deci et al., Reference Deci, Koestner and Ryan1999; Gneezy et al., Reference Gneezy, Meier and Rey-Biel2011), and when and how work becomes a source of meaning that impacts performance (Cassar & Meier, Reference Cassar and Meier2018). Our article advances this research by emphasizing the unique nature of awards and by explaining how awards fit within the larger incentives landscape. With our framework, we move away from a discussion focused on extrinsic and intrinsic motivation (Deci & Ryan, Reference Deci and Ryan1987) to emphasize the complex interactions between economic, social, and psychological mechanisms. We argue that although awards are extrinsic incentives, they often function quite differently from monetary incentives. In the behavioral economics literature, awards are increasingly being studied as an intervention to motivate behavior – they benefit from being an extrinsic incentive that management can use, but at the same time, they do not need a monetary component and therefore tend to be less expensive, making them an attractive alternative (Gauri et al., Reference Gauri, Jamison, Mazar and Ozier2021). We provide a framework through which to look at the findings in this area and highlight gaps that future work can examine. Through this, we contribute to the literature on non-pecuniary incentives and help shape the future trajectory of this under-researched field (Chen et al., Reference Chen, Cramton, List and Ockenfels2021).
In what follows, we first introduce the three dimensions of awards. Section two examines interactions among these dimensions. Section three reviews the literature, highlighting the major characteristics of awards and how they influence the value of awards through the mechanisms of tangibility, social signaling, and self-signaling. We conclude with a discussion drawing attention to important areas for future research.
1.1. The tangibility dimension
Tangible incentives have an economic value. They can be monetary or non-monetary. A tangible monetary incentive is an incentive with a clear dollar value that is fungible, such as cash, a check, or a gift card. A tangible non-monetary incentive is an incentive without a clear dollar value and which is not fungible. A watch given to employees as a holiday gift is an example.
Awards may or may not have a tangible component. When they do, the tangible component of awards can be trivial, as with a trophy. It can also be of significant value, as when professors are awarded one less class to teach for winning a teaching award. Adding a tangible component to an award, and in particular money, makes the award more easily comparable to other incentives, where the magnitude of the added financial incentive matters (Camerer & Hogarth, Reference Camerer and Hogarth1999; Gneezy & Rustichini, Reference Gneezy and Rustichini2000; Parco et al., Reference Parco, Rapoport and Stein2002). Tangible awards, both monetary and non-monetary, differ from regular monetary incentives because of their social and self-signaling functions. The monetary component can be secondary to the signaling functions: Brunt et al (Reference Brunt, Lerner and Nicholas2012) examine the effect of an award given by the Royal Agricultural Society of England (RASE) on competitive entry and patenting, and find that the medals were viewed as more important than the monetary component. In a similar vein, the Nobel Prize grants a large dollar amount (tangible), yet a substantial portion of its value appears to lie in the honor of being selected or even just considered (social and self-signaling). The same is likely to be true of many corporate awards (e.g., Salesperson of the Year). We expect that the value of tangible awards is often higher than their cash value.
1.2. The social signaling dimension
Social signaling arises in situations with asymmetric information where a person’s actions can reveal information about themselves to others. Awards usually have a social signaling dimension, from which they likely derive some of their value (Gallus & Frey, Reference Gallus and Frey2017). For social signaling to arise, there must be an audience who learns about the award. The social signaling value of the award is higher the less readily the person’s actions can be judged by others in the absence of the award. This can be because the audience lacks the expertise to evaluate the person’s work, or because the audience cannot observe what the person does. Winning a scholarly award or an award for exceptional technical achievements (e.g., being appointed IBM Fellow) signals ability – even to those who cannot understand the contribution itself. Receiving a medal for bravery in the battlefield signals to others that a person was brave – even without observability of the details of the actions. This is one proposed reason why Napoléon Bonaparte invented the Légion d’honneur, as the creation of the mass army meant that bravery became less observable than it used to be during small-scale raids or battles (Goode, Reference Goode1978).
We can expect the social signaling value of an award to be higher the more ‘news’ the award reveals and the more credible the signal.
1.3. The self-signaling dimension
People can be uncertain about their identity (Akerlof & Kranton, Reference Akerlof and Kranton2000), for example due to imperfect recall (Bénabou & Tirole, Reference Bénabou and Tirole2006). In these cases, people’s actions can serve as self-signals about their ‘true type.’ This idea has roots in social psychology, where self-perception theory posits that people’s identities and self concepts are not fixed and not perfectly knowable by the individual (Bem, Reference Bem and Berkowitz1972). Instead, people infer what sort of person they are from observing themselves, in much the same way as we infer what sort of people others are by observing their behavior (Bodner & Prelec, Reference Bodner and Prelec2003).
While actions can serve as a direct way to self-signal, receiving an award is not a choice that a person can make. Hence, the self-signaling function comes from the actions leading up to the award, and from others’ choice to bestow the award. Awards may thus be expected to help recipients update their beliefs regarding their true type. For example, an individual who initially believes he or she is brave may validate this belief by demonstrating bravery in the battlefield. Receiving a medal magnifies the self-signal and further reinforces the belief.
Where individuals initially hold miscalibrated beliefs about their own performance or ability, for instance due to self-stereotyping that arises when working in fields associated with a different social category (e.g., women in STEM fields), awards may help align beliefs with actual ability (Gallus & Heikensten, Reference Gallus and Heikensten2020). Where individuals are unsure about what social groups they belong to and identify with, awards may serve to reinforce a sense of identity (e.g., Gallus, Reference Gallus2017).
2. Interactions among the three dimensions
The three dimensions of awards can interact directly or indirectly, and positively or negatively, to enhance or diminish an award’s overall value. As such, the different dimensions should not be viewed in isolation (Lourenço, Reference Lourenço2016). This is an opportunity for experimental research to advance our knowledge of the effects and mechanisms of awards. To inform future research, we lay out propositions for how interactions among the three dimensions can affect the motivational and performance effects of awards. Each section first covers the positive interactions, followed by possible negative interactions.
2.1. Interactions between social signaling and self-signaling
There are three key ways through which social signaling and self-signaling can be expected to interact positively. First, a greater social signaling value can increase the recipient’s evaluation of the award’s significance, and, in turn, enhance its self-signaling value. A public awards ceremony strengthens the social signal because the audience enhances the credibility of the giver’s intentions; an individual recognized in front of others is less likely to question whether the praise is authentic. The public credibility can feed back into self-signaling by reinforcing the recipient’s sense of genuine achievement. The self-signaling function can also increase the social signaling value: Once recipients internalize the idea that they deserve the honor, they may project greater confidence and competence in social settings, which may cement their credibility in the eyes of others.
Second, a greater social signaling value can lead recipients to align their behavior with the values implied by the award, and vice versa. This mechanism can operate via a desire to meet expectations set by the award: “I received an environmental leadership award, so I better act in an environmentally responsible way.” The resulting behavior could entail belief updating, for instance through cognitive dissonance reduction. Once this self-signal is amplified, recipients may further engage in pro-environmental behaviors, which further reinforces the social signaling value of the award. Restivo and Van De Rijt (Reference Restivo and Van De Rijt2012) illustrate this cycle: Receiving a “barnstar” badge increased productivity of highly active but previously unrecognized Wikipedia editors by 60%, and also, importantly, increased the likelihood of receiving additional barnstars.
Lastly, social and self-signaling also interact positively and reinforce one another when beliefs about the award are updated. If others – especially respected peers, institutions, or the media – place high value on an award (giving it a high social signaling value), the recipient may revise their own beliefs about its significance. The positive external reactions serve as a recurring reminder of the award’s value, solidifying the recipient’s self belief. Likewise, if recipients internalize the award’s values and act the part, their behavior may positively shape social evaluations and thus the social signaling value of the award.
However, the interactions can also be negative. The first condition under which this can happen is when the underlying behavior has low or no social signaling value, and is not pursued out of continued intrinsic motivation. In such cases, getting an award may lead recipients to infer that they meet or exceed relevant performance thresholds, and may give them a license to shift their efforts towards other dimensions (Borjas & Doran, Reference Borjas and Doran2015; Malmendier & Tate, Reference Malmendier and Tate2009; Robinson et al., Reference Robinson, Gallus, Lee and Rogers2021; Yu et al., Reference Yu, Liang and Xie2024). The second condition is when the social signaling value is high, which may provoke crowding-out effects like the ones observed for other extrinsic incentives: recipients may start to doubt their own motivations (Gneezy et al., Reference Gneezy, Meier and Rey-Biel2011). Though not in the context of awards, an experiment by Gneezy et al (Reference Gneezy, Gneezy, Riener and Nelson2012) demonstrates how self- and social signaling can conflict. In a restaurant setting, the authors manipulated whether diners paid privately (by putting money into a sealed envelope) or publicly (by paying the owner directly). Their finding that diners paid more when asked to pay anonymously than when observed is consistent with a negative interaction among the two kinds of signaling: Being monitored by the owner interfered with the self-signaling mechanism, leading individuals to believe they would be paying because they “had to,” not because of their intrinsic qualities and motivations.
2.2. Interactions between tangibility and social signaling
Tangibility and social signaling can interact positively, such as when greater tangibility enhances the credibility of the award, when it increases competition for the award and thus the social signal of winning it, or when it draws increased audience attention. Thus, a larger tangible prize may be instrumental to establish the prestige and signaling functions of a new award, or to turn an award given for a behavior that is not signal-worthy (e.g., attendance at school; Robinson et al., Reference Robinson, Gallus, Lee and Rogers2021) into something individuals would strive to achieve. Vice versa, the social signaling value can enhance the expected tangible returns from an award, as has been shown in the arts, in business and in other fields (e.g., Beer et al., Reference Beer, Ahn and Leider2022; Ginsburgh & Van Ours, Reference Ginsburgh and Van Ours2003; Nelson et al., Reference Nelson, Donihue, Waldman and Wheaton2001).
Interactions between tangibility and social signaling can also be negative. The audience may infer that the award winners only exerted effort for personal gain, not because of their intrinsic qualities or motivations (Bénabou & Tirole, Reference Bénabou and Tirole2006). Ariely et al (Reference Ariely, Bracha and Meier2009) find that when prosocial actions are visible to others, individuals are motivated by the positive image these actions convey. However, introducing extrinsic monetary incentives can dilute this effect, as observers may question whether the actions are driven by genuine altruism or personal gain. This dilution is particularly pronounced in public settings, where actions are more visible, leading to a potential decrease in prosocial behavior due to crowding out.
In some social contexts, tangible monetary awards may be unacceptable, while non-monetary ones may be considered appropriate. Consider a medal awarded for bravery in the battlefield, where the addition of a precise monetary value may cheapen the commendation in the eyes of the public (Gneezy & Rustichini, Reference Gneezy and Rustichini2000) or suggest a market-pricing based interaction (Gallus et al., Reference Gallus, Reiff, Kamenica and Fiske2022).
2.3. Interactions between tangibility and self-signaling
Tangibility and self-signaling can interact positively, in much the same way as social and self-signaling can interact: A greater tangible component can lead recipients to favorably update their beliefs about the award’s credibility and importance, which can reinforce the self-signal. Vice versa, an enhanced self-signaling value can lead recipients to more strongly internalize the values or message of the award and act accordingly, which may bolster confidence and lead to improved tangible outcomes. These interactions should be isolated and tested in future experimental work.
The interactions between tangibility and self-signaling can also be negative. A larger tangible award may lead recipients to question whether they engaged in the activity because they care about it, or simply because of the tangible benefits that come with winning. Kirgios et al (Reference Kirgios, Chang, Levine, Milkman and Kessler2020) highlight this tension in the domain of financial incentives, noting that although they are often effective at inducing good behavior, financial incentives can have self-image costs: those who receive them may view their action less positively. The authors resolve this tension by motivating participants with financial rewards and then giving them the opportunity to forgo those rewards to signal their past actions were intrinsically motivated. Similar behavior can be observed with some awards, where recipients donate the tangible component (Bengali & Santora, Reference Bengali and Santora2021; Hopkins, Reference Hopkins2023). Gneezy and Rustichini (Reference Gneezy and Rustichini2000) demonstrate that explicit monetary incentives can replace an intrinsic sense of duty or goodwill with a transactional mindset, thereby altering both how individuals see themselves and how others view their motives. Related work by Bowles discusses how incentives can backfire by signaling that self-interested behavior is appropriate, thereby undermining self-signals (Bowles, Reference Bowles2008).
Awards differ from simple monetary incentives in that they involve a social signaling element – often visible to peers, superiors, or the broader public. Coupled with a potentially significant tangible dimension, this social component can make awards highly coveted forms of extrinsic incentives. At the same time, the behaviors and values emphasized by an award can trigger self-signaling and reputation-building dynamics that may encourage recipients to continue performing the desired behaviors or, in some instances, lead to adverse effects if the recognition negatively affects the self-signal. This underscores the need for further research on how best to design and implement awards so as to capture their unique motivational benefits while minimizing potential pitfalls.
3. How the characteristics of awards shape their value
The extant body of research on awards has yet to agree on a set of characteristics that awards typically hold in common. We have advanced a definition of awards, and we moreover propose what can be considered key characteristics of awards. We discuss how they may influence the value of awards through the three dimensions of tangibility, social signaling and self-signaling. Specifically, we consider the audience, the scarcity of the award, the status of the giver, and key aspects of the selection process. We discuss these characteristics through the lenses of the three dimensions to show how they help us understand the motivational effects of awards.
Table 1 provides a summary of the cross-disciplinary literature on awards as incentives. Based on our framework, we code 37 studies in economics, management, and related fields. The table’s aim is to review and integrate the literature and provide a quick way of stating which of the three dimensions most likely drove the effects of any particular award (see Column 2), what types of awards have been studied (see the columns on award characteristics), and what results were obtained. Table A.1 in the Online Appendix goes into more detail on each of the columns. As before, we draw on the literature where possible, but we note that many studies have analyzed the overall effects of a given award, without paying attention to how that effect may have been shaped by the specific award characteristics. Thus, where evidence is lacking, we offer conjectures that would benefit from careful experimental examination.
Table 1. Literature on awards as incentives
Notes: The table provides an overview of much of the literature on awards as incentives. Column 2 summarizes which of the three dimensions most likely drove the effects of the award in question. Our interpretation correlates strongly with what the authors identify as the main mechanism, but there are cases in which we think another dimension, not mentioned by the authors, may also be at play (e.g., self-signaling). The columns on the characteristics of awards provide more information and facilitate judgment of which dimension is aided.
In Table 1, the columns on the characteristics of awards provide more information and facilitate judgment of which mechanisms may be at play. They follow available information about the award in the paper, and where possible, we attempt to supplement with information that can be found on the award by searching online. All awards in the table are to some extent public, by virtue of being an award. “Audience” specifies whether the award was expressly presented in front of a specific group (S) or was simply visible to the public (P). “Scarcity” refers to whether the number of awards was artificially capped. “High-status giver” refers to the status of the person or organization conferring the award relative to the recipient. “Nomination” describes whether the selection process included no nomination, nominations by the self, or nominations by others. In the “Criteria” column, “Relative” indicates competition (e.g., the award is given to the fastest runner); “Absolute” indicates crossing or fulfilling absolute criteria (e.g., the award is given to anyone who crosses the finish line). In the “Evaluation” column, “Subjective” indicates that the evaluation process included some form of subjectivity by the evaluators while “Objective” indicates that the evaluation process was tied to measurable performance dimensions. “O + Rand” indicates that the paper included some objective and random evaluations in the evaluation process; “Rand” is based on the agents’ perception (not on whether there was randomization behind the scenes). Finally, the “Results” column focuses on the effects of the award rather than addressing all programs that may have been studied in a given paper.
We grouped the papers by outcome: whether the award had a positive effect on outcomes (n = 26 papers), negative effects (n = 7 papers), or mixed effects (n = 4 papers). Many of the studies display nuanced findings that resist easy classification, reinforcing the importance of examining the specific award characteristics and the contexts in which awards are bestowed.
3.1. Audience
Social signal: An audience is necessary for an award to have social signaling value. Audiences can vary in size and type. The Audience column in Table 1 specifies whether the award was conferred in front of a specific group of people (e.g., peers/colleagues, managers/leaders, other ceremony attendees) (n = 24 papers) or the public at large (n = 13 papers). While this was not discussed specifically in the papers, we can see that past work has considered various types of audiences: the general public, specific groups (e.g., Business Press Award attendees, peers in a given company), and even the experimenter and other participants in the context of lab experiments (Ball et al., Reference Ball, Eckel, Grossman and Zame2001). We expect an award’s social signaling value to increase with the size of the audience, as well as with its relevance. The audience may have tangible relevance (e.g., a boss deciding on promotions), or self-signaling relevance (e.g., patients whom one helped).
Award ceremonies are a major way of curating the audience. Within organizations, the presence of board members and senior leadership may increase the value of awards (Deloitte, 2019). Indeed, it is often the case that a large fraction of the costs of award bestowals can be traced back to the ceremony (English, Reference English2014; Mckinsey & Company, 2009). Table 1 shows that several studies have examined awards that involve a ceremony. Among those, Neckermann and Frey (Reference Neckermann and Frey2013) is notable for estimating the monetary value of a ceremony, finding that a ceremony increased employees’ stated willingness to share important information with colleagues by as much as increasing the cash value of the award from $0 to $1,000. Lacetera and Macis (Reference Lacetera and Macis2010) find that awarding blood donors only boosts the frequency of donations among existing donors if the award is promised to be made public through an announcement in the local newspaper and a ceremony. These and other studies in the table point to the important motivational role played by the audience, which has yet to be studied more systematically in field contexts.
The choice of audience also necessitates consideration of risks. Indeed, not all awards are maximally public – in some cases, the social signaling function is deliberately curtailed. This may be because of negative consequences resulting from non-recipients’ sentiments and envy (Li & Lu, Reference Li and Lu2022; Liao et al., Reference Liao, Feng, Zhu and Guan2023; Nickerson & Zenger, Reference Nickerson and Zenger2008; Obloj & Zenger, Reference Obloj and Zenger2017), or because recipients may fear social sanctions from peers and consequently adjust their behavior downward in order to ‘fit in’ (Bursztyn & Jensen, Reference Bursztyn and Jensen2015). Awards may moreover lead to inadvertent attrition of a firm’s talent if the awards serve as public quality signals (Akerlof, Reference Akerlof1970; Gallus & Frey, Reference Gallus and Frey2016). These costs can explain cases where organizations explicitly ask employees to not disclose their receipt of an award to others (we are not aware of any research investigating such cases), and those where organizations carefully limit the audience that witnesses the award to higher-ups or to outsiders like the recipients’ families (Robinson et al., Reference Robinson, Gallus, Lee and Rogers2021).
Self-signal: The audience also affects the self-signal associated with an award. Receiving an award in front of an audience can confirm to the recipients that they are indeed among a defined group of honorees. With an audience, the giver puts their reputation on the line. This differentiates awards from positive feedback and praise, which can in principle be given to anybody, at little reputational cost to the giver, and may therefore serve as a less credible signal.
A few papers in Table 1 speak to how the presence or absence of an audience might affect the self-signaling function of awards, and point to interesting questions for future research. In a study on buyer-supplier relationships in the laboratory, Beer et al (Reference Beer, Ahn and Leider2022) found that receiving private symbolic awards led to higher provision of quality and higher buyer profits. The effect disappeared when awards were made public in part because buyers had to pay higher prices to get the good suppliers, but also because making the award public “crowded out the intrinsic value of the award for suppliers.” Efficiency gains occurred only when the award was private and quality was public.
Gallus and Heikensten (Reference Gallus and Heikensten2020) find the opposite, but in a different context: In a laboratory experiment examining the effects of public awards on the gender gap in sharing ideas, a public ceremony closed the gender gap in contributions while privately provided awards did not. Further exploratory analyses suggest that the publicness and with it the visibility of the audience of non-recipients may have enhanced women’s trust in the award’s signal. Without an audience, some groups of people may be less likely to believe that an award they received is reserved for special achievement, reducing the self-signaling value.
Future work can test these and other implications that different kinds of audiences may have for the self-signaling functions of awards. This is all the more important since standard monetary incentives and private feedback interventions lack this public accountability dimension. Experimental work can help systematically test when (and for whom) public recognition enhances or undermines the self-signaling function of awards.
Tangibility: The audience of an award can have significant implications for its expected tangible value to the recipient. Several studies highlight how winning an award can boost recipients’ subsequent success in tangible ways, such as by increasing book sales, citations, or stock market returns for firms whose CEOs won awards (e.g., Ammann et al., Reference Ammann, Horsch and Oesch2016; Azoulay et al., Reference Azoulay, Stuart and Wang2014; Chan et al., Reference Chan, Frey, Gallus and Torgler2014; English, Reference English2014). In academia, Merton (Reference Merton1968) famously labeled the phenomenon of cumulative advantage the “Matthew Effect,” whereby recognition (including awards) tends to amplify the visibility and citations of already-productive scholars. Although it is plausible that similar benefits from winning an award could arise in workplace contexts – leading, for example, to promotions or improved performance evaluations – Table 1 shows that this remains a largely open question in need of systematic empirical testing.
3.2. Scarcity
Social signal: In creating an award, scarcity is often self imposed by the group conferring the award. Scarcity depends on the frequency of events and the number of awards bestowed per event. While other rewards can be given out frequently without losing value, awards derive part of their worth from their scarcity. Discussions around notable awards like the Nobel Prize (which has seen the addition of awards in new fields) or the John Bates Clark Medal (which started being given out more frequently) suggest that scarcity plays a major role. Indeed, for a long time observers have noted a proliferation of awards (e.g., Barro et al., Reference Barro, McCleary and McQuoid2011; Frey & Gallus, Reference Frey and Gallus2016; Goode, Reference Goode1978). This may be facilitated at least in part by the fact that the provision of awards is not inherently limited by a budget constraint if the award does not have a significant tangible component. Hansen and Weisbrod (Reference Hansen and Weisbrod1972) already noted that while awards are desired and often costless to produce, “it does not follow that allocative efficiency calls for an unlimited increase in their number.” This is largely due to the effect that a decrease in scarcity has on the award’s social signaling value. Giving the same award out too often, or handing out too many different awards in a given field, diffuses attention.
Determining the optimal number of recipients for a given award is non-trivial because reputation pooling among recipients may lead to positive interactions that increase the social signaling value of the award for each individual recipient – despite the apparent reduction in scarcity. The number of awards should also shape the reactions of non-winners, whose likelihood of winning in the future depends on the award’s scarcity. As Table 1 shows, these conjectures remain to be tested.
The table shows that in 21 papers, the awards in question were capped. Yet, the degree of scarcity is often simply taken as a fixed attribute of an award, and is not systematically studied to test its implications for social signaling. Though not explicitly on awards but rather recognition, Bradler et al (Reference Bradler, Dur, Neckermann and Non2016) shed light on what the implications of different degrees of scarcity may be. The study varied whether recognition was given to the top performer, the top three, or all eight workers. The authors found that recognition increased subsequent performance substantially when given to the best three performers out of a group of eight, and that these effects were driven by non-recipients who were subsequently working harder.
Self-signal: Scarcity also affects self-signaling: Receiving an award that is scarce may signal to the recipient that their performance is a rare achievement. In contrast, the proliferation of awards may reduce an award’s value. To mitigate such a loss in value while reaching a broader share of employees, organizations have been observed to diversify their award programs (Gallus, Reference Gallus2011). One form of diversification is horizontal diversification, where organizations create awards for different types of behaviors, such as awards for different performance categories (e.g., life insurance sales, auto insurance sales, etc.). To the extent that these awards occupy separate mental bins, as posited by Best (Reference Best2008), we may expect them to maintain distinct self-signaling value despite the proliferation. Similarly, vertically diversified award schemes may retain self-signaling value for recipients, especially if built on an outlined progression where recipients may expect of themselves to climb in the rungs of the award (e.g., in national honors systems).
Tangibility: We expect scarcer awards to have larger tangible implications, because of the stronger social signaling function (all else held constant). Naturally, scarcity can also directly affect the tangible value of a given award if there is a set budget and the tangible component coming with each award is a fraction of the total budget. Vice versa, the budget may affect decisions about scarcity, which should in turn affect the self- and social signaling value. Lastly, the tangible element of an award may be used to make up for the foregone signaling value of an award that is not kept scarce.
This illustrates how the three dimensions can interact, offering further avenues that future work on awards needs to investigate. We are not aware of any research on the relationship between scarcity, tangibility, and signaling, and consider it an important direction for future research.
3.3. Status of the giver
Awards must be conferred by another party – they cannot be purchased. The giver can be a group or an organization, an organizational insider or an external party (e.g., media). Table 1 shows that extant research has analyzed the effects of awards with different kinds of givers, including prestigious academic associations (e.g., Chan, Frey, Gallus, Torgler, Reference Chan, Frey, Gallus and Torgler2014), the business press (e.g., Malmendier & Tate, Reference Malmendier and Tate2009; Shi et al., Reference Shi, Zhang and Hoskisson2017), and senior leadership within organizations (e.g., Li & Lu, Reference Li and Lu2022; Liao et al., Reference Liao, Feng, Zhu and Guan2023; Lourenço, Reference Lourenço2016). In the lab, most rely on the experimentalist as the giver (e.g., Kosfeld & Neckermann, Reference Kosfeld and Neckermann2011).
As stated by Goode (Reference Goode1978), for an award to be valuable, it is important that the giver “possesses prestige to confer on others” (p 152). The status of the giver is an important dimension. Yet, we are not aware of research that has systematically varied the status of the giver. We consider this an opportunity, especially for lab experimentalists who may be in a better position to vary this dimension. Below, we focus on outlining several predictions. Most fundamentally, we propose that the value of an award increases in the status of the giver (where status is evaluated from the perspective of the awardee(s) in question). In 26 of the papers reviewed in Table 1, the awards in questions were presented by a high-status giver.
Social signal: The social signaling value of an award should increase with the status of the giver. In organizations with multiple different awards, the status of the givers relative to one-another can induce a ranking of those awards. Awards given by the CEO likely have a greater social signaling value than those given by middle management, all else equal. In cases where the giver has low status in the eyes of relevant reference groups, other benefits may be necessary for the awardee to respond favorably to the award.
Self-signal: The status of the giver may also impact the award’s value as a self-signal. Receiving an award from a high-status giver signals to the recipients that their actions are considered important. It may also lead the recipients to identify more strongly with the giver and their goals (Gallus & Frey, Reference Gallus and Frey2017). In a field experiment involving more than 4,000 new Wikipedia editors, Gallus (Reference Gallus2017) found that receiving symbolic awards that were given by established community members increased newcomer retention by 20%, with the effects lasting for more than one year after the initial award bestowal. Notably, the awards also raised recipients’ likelihood of engaging in less visible extra-role behaviors. Increased self identification as a “Wikipedian” appears to have been an important mechanism behind these effects.
The same giver may have different implications for self-signaling than for social signaling. We conjecture that this is because of differences in perceptions of status and the ability to judge merit. Thus, while the social signals may be highest for awards coming from senior leadership, the self-signaling value may be stronger if an award comes from givers at lower rungs of the organization, but who have greater ability to judge merit (including peers or even subordinates). Future experiments could usefully disentangle these differences and their self-signaling implications by varying what information recipients and the audience receive about the giver.
Tangibility: The tangible, economic consequences of receiving an award should also increase in the status of the giver. If an academic receives an award from a body that enjoys high status in the eyes of the public, their market value as an expert witness or speaker should increase (Chan, Frey, Gallus, Torgler, et al., Reference Chan, Frey, Gallus, Schaffner, Torgler and Whyte2014). Vice versa, if the giver’s status is unclear, for instance because the awarding body is new, adding a significant tangible element can serve to establish the award, and thus make it a valuable self- and social signal. If the giver’s status is low, the tangible element may be a substitute for the low signaling value. A large amount of money can serve to attract notable recipients, who can in turn increase the prestige of the award via reputation spillovers. While these conjectures remain to be tested, there is anecdotal evidence lending support. Most famously, the decision to attach a significant monetary sum to the Nobel Prize likely contributed to its establishment as an important award, despite the controversial legacy of Alfred Nobel himself. Today, the status of the Nobel Prize is so high that those who desire it apparently do so largely for its signaling value – the monetary element seems to have become an ancillary benefit and is at times even donated (Bengali & Santora, Reference Bengali and Santora2021; Hopkins, Reference Hopkins2023).
3.4. Selection process: Nomination, criteria, and evaluation
Many important awards involve an elaborate selection process, which includes nominations (by contestants themselves or by others), different criteria (absolute, relative), and evaluations (subjective, objective, with or without a transparently random component).
Social signal: We conjecture that having been nominated by experts sends a strong signal of merit. Self-nominations may change the signal, as it is known that the person aspired to receive the award. Interestingly, the majority of papers (n = 24) covered awards that were not nomination based. Where the awards that were investigated did involve nominations, this fact was often not even mentioned in the paper. The award selection criteria are another important part of the selection process that influences the social signaling value. The criteria can be relative and hence competitive, such as when the best salesperson enters the Top Performers Club (e.g., see Ammann et al., Reference Ammann, Horsch and Oesch2016; Ball et al., Reference Ball, Eckel, Grossman and Zame2001, and others in Table 1). They can also be absolute, such as when everybody who crosses a stipulated threshold is awarded (see Anderson et al., Reference Anderson, Hildreth and Howland2015; Ashraf et al., Reference Ashraf, Bandiera and Lee2014; Cicognani et al., Reference Cicognani, Stein, Tonin and Vlassopoulos2023, and others in Table 1). With absolute criteria, the social signaling value increases with the degree of difficulty and the signal-worthiness of the underlying behavior. With relative criteria, the status of contenders relative to whom the recipient was evaluated affects the social signaling value. In many cases, the identity of contenders is disclosed. The German Book Prize (Deutscher Buchpreis) has been reported—e.g., Kehlmann (Reference Kehlmann2008)—to informally oblige shortlisted authors to attend the ceremony, with non-attendance said to preclude winning. This makes it clear who the winners were evaluated against. In other cases, the list of final contenders is not disclosed or it is disclosed only with a significant delay (50 years in the case of the Nobel Prizes).
The effects of relative versus absolute criteria, and of whether the list of contenders is disclosed or not, have not yet been studied in the awards domain. 11 papers in Table 1 include awards that had absolute criteria, and 22 had relative criteria. One interesting question for future research to investigate is under what conditions relative criteria increase the value of an award, and when they backfire, possibly because of the implications for social relationships (Gallus et al., Reference Gallus, Reiff, Kamenica and Fiske2022). Studies in the social comparison domain suggest negative effects of social comparison information on psychological well-being and trust, with the type of comparison (upwards versus downwards) often mediating effects (Brown et al., Reference Brown, Ferris, Heller and Keeping2007; Dunn et al., Reference Dunn, Ruedy and Schweitzer2012). Physicians given social comparison information in a field experiment suffered with respect to job satisfaction and burnout (Reiff et al., Reference Reiff, Zhang, Pedley, Gallus, Dai, Leuchter, Han, Goshgarian, Fox, Vangala, Grossman and Croymans2022). Similarly, field and online experiments that elicited people’s willingness to pay for public recognition suggest that in contexts where people are familiar with one another, publicly ranking them based on their performance on a given task (e.g., fundraising success) can create net negative psychological effects (Butera et al., Reference Butera, Metcalfe, Morrison and Taubinsky2022).
Lastly, whether the evaluation is purely objective or whether it contains subjectivity has implications for the social signaling value. Gallus and Frey (Reference Gallus and Frey2016) introduced the related distinction between “discretionary awards” and “confirmatory awards.” Discretionary awards are based on subjective evaluations and more often involve an element of surprise. Because discretionary awards rely on subjective judgment rather than solely objective criteria, they may be perceived as more authentic recognitions of merit, sending a stronger signal about the giver’s assessment of the recipient’s unique contributions or qualities. Awards based on objective evaluations on the other hand often only amplify the visibility of already available information. For instance, in sales contexts, rankings of salespeople are often available to everybody, but the best salesperson additionally receives public appraisal. In these cases, the selection of who wins the award is largely automatic. The existence of the award may send general signals about the giver’s beliefs, but there is no specific signal about the giver’s beliefs and attitudes towards the recipient.
Self-signal: Nominations from others can be expected to strongly shape the self-signaling value of awards. This may be because the people nominating are in the best position to credibly judge merit, as in the case of awards for nurses, which are often based on patients’ nominations, service awards that are based on nominations from customers, or peer-based nominations in the sciences. Self-nominations, in contrast, may reduce the self-signaling value of awards.
In Table 1, Seventeen papers cover awards with an objective evaluation process and 16 with a subjective process. One interesting question for future research is whether (and under what conditions) knowing that an award has a subjective evaluation process might increase the value of an award as a self-signal, and when it may have inadvertent negative effects. Knowing that a panel of qualified individuals evaluated one’s work and found it deserving of recognition may make an award more meaningful.
We expect the selection process (nominations, criteria, evaluation) to have meaningful implications for who enters the consideration set, and for how individuals respond to receiving a given award – in no small part because of the self-signaling implications. For instance, if awards rely on self- or social nominations, relative performance criteria, and/or subjective evaluations, past literature investigating gender gaps suggests that we may see fewer women entering and receiving awards – especially in male-typed fields (Croson & Gneezy, Reference Croson and Gneezy2009; Chang et al., Reference Chang, Saccardo and Gallus2025; Exley & Kessler, Reference Exley and Kessler2022; Flory et al., Reference Flory, Leibbrandt and List2015; Niederle & Vesterlund, Reference Niederle and Vesterlund2007). These predictions have yet to be systematically tested. They may point to explanations and potential solutions for addressing the documented gender gaps in award bestowals in important fields of society, such as in the biomedical sciences where women have been shown to receive significantly fewer and less prestigious awards (Ma et al., Reference Ma, Oliveira, Woodruff and Uzzi2019).
Tangibility: Awards that are based on nominations are expected to yield tangible value because of both the signal coming from the fact that an individual was nominated, and the signal from winning. Even without winning, the nomination by peers can be a valuable job market signal, while a self-nomination might signal a proactive agentic attitude, which may be valued by some employers. But again, there may be important heterogeneity that future research needs to investigate. For instance, it is possible that for women, a self-nomination is seen as inappropriately assertive, yielding negative economic consequences.
Vice versa, a high tangible value of an award may attract nominations, and there could be unexplored gender heterogeneity. The criteria and evaluation should affect the tangible value of winning an award through the social signaling mechanisms discussed above. When the criteria are relative, and the evaluation is subjective, its value likely becomes more significant, both to the recipient and the audience, since the award is providing new information.
Future experimental work could examine how intentional varyiation in the selection process–nominations, criteria, and evaluation–impacts the motivational value of awards. Card et al (Reference Card, DellaVigna, Funk and Iriberri2022) analyze the selection of Fellows of the Econometric Society, decomposing gender gaps into nomination and election stages. Conditional on achievement, they document a large negative selection gap for women in the 1933–1979 period. This gap turns positive (though not significant) in 1980–2010; and it becomes large and significant in the most recent decade, coinciding with the Nominating Committee’s 2012 mandate to nominate highly qualified women.
4. Discussion
Awards are widely used as incentives. This paper situates awards in the broader incentives landscape. It shows how the motivational effects of awards can be understood within a framework that considers three sources of value: the tangible value of an award, its function as a self-signal, and its social signaling value. Our framework describes how the three dimensions of awards can interact in ways that increase or decrease the overall value of the award. It also makes clear that researchers interested in incentives more broadly may benefit from going beyond the dichotomy of extrinsic and intrinsic motivation, and think about how economic, social, and psychological mechanisms interact.
We believe that our approach is a useful guide to the study of awards, and that it will also enrich the study of incentives at large. To help lay the foundations for future research on awards, our review of the literature systematically provides information on the characteristics of the awards studied, and summarizes which of the three dimensions most likely drove the effects observed (see Table 1). Our framework reveals important gaps, which offer avenues for future research. A large part of the literature we reviewed focuses on awards with an important social signaling dimension, often through a sizable audience, some degree of scarcity, and a high-status giver. The self-signaling function of awards, and its interactions with tangibility and social signaling, emerges as a key area in need of more systematic research. We discuss where we believe that self-signaling meaningfully drove the effects, but this has rarely been directly investigated in the papers.
We have outlined directions for future experimental work in the sections above. To conclude, we offer four broader lines where research would advance our understanding of the unique motivational effects of awards.
(1) What motivates people to strive to receive awards, and why might there be a disconnect between stated preferences and revealed behavior? We conjecture that ex ante award-seeking behavior is driven more by the social signaling value than by the tangible and self-signaling value of awards. Upon award receipt, however, we expect self-signaling to play a fundamental and understudied role. This paper discusses how we expect the different characteristics of awards to affect self-signaling.
(2) When and why does a tangible component increase an award’s signaling value, and when is it counterproductive? This article discusses several conditions, such as how tangibility may substitute for an initially lower status of the giver, but more work is needed to test and expand on these predictions.
(3) How do social and self-signaling considerations influence peer- and self-nominations, and with what implications for who ultimately gets recognized? This appears to be especially important to examine in fields and for activities that are strongly associated with a given stereotype, where biased nominations and evaluations might cause recognition gaps that may perpetuate stereotypes.
(4) When and how can the social signals emitted by awards establish role models, which in turn create incentives for others to emulate the behavior? And when do awards lead to envy, which may cause recipients to disengage in order to avoid social costs? We discuss aspects such as the signal-worthiness of the underlying behavior and the intrinsic motivation to pursue it, but more research is needed to shed light on this important topic.
The literature on awards and incentives stands to gain if future empirical research focuses on the three dimensions we outline as well as their interactions, if it pays greater attention to self-signaling as a mechanism, and if it examines the relevant award characteristics. Controlled experiments in the lab and field will be critical for systematically varying key characteristics and isolating the mechanisms through which they affect behavior.
Supplementary material
The supplementary material for this article can be found at https://doi.org/10.1017/eec.2025.10021.
Competing interests
None
Funding statement
This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.
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