Social Status and the Design of Optimal Badges

author: Greg Stoddard, Department of Electrical Engineering and Computer Science, Northwestern University
published: Oct. 6, 2014,   recorded: December 2013,   views: 1729

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Many websites rely on user-generated content to provide value to consumers. Often these websites incentivize user-generated content by awarding users badges based on their contributions. These badges confer value upon users as a symbol of social status. In this paper, we study the optimal design of a system of badges for a designer whose goal is to maximize contributions. We assume users have heterogenous abilities drawn from a common prior and choose how much effort to exert towards a given task. A user’s ability and choice of effort determines the level of contribution he makes to the site. A user earns a badge if his contribution surpasses a pre-specified threshold. The problem facing the designer then is how to set badge thresholds to incentivize contributions from users. Our main result is that the optimal total contribution can be well-approximated with a small number of badges. Specifically, with a number of badges just logarithmic in the number of users, the designer can generate at least half as much contribution as the optimal unconstrained (non-badge-based) mechanism.

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