Given the proliferation of online platforms for crowdsourcing contests, we address the inconsistencies in the extant literature about the behavioral effects of increasing the prize awarded by contest organizers. We endeavor to resolve these inconsistencies by analyzing user behavior in a highly controlled experimental setting in which users can participate (by exerting real effort rather than stated effort) in multiple online contests that vary only in their prizes. The analysis of the behavior of 731 active participants in our first experiment showed that both participation and effort were non-monotonic with the prize, that the low-prize contest was the most effective for the organizers, and that increasing the prize of the low-prize or high-prize contest by 50% actually decreased the benefits for organizers. Our findings advance theory by providing insight into when and why extrinsic incentives fail to produce the desired effects in crowdsourcing contests
