This month’s Capital Ideas, published by the University of Chicago Graduate School of Business, features work done by our colleague Oleg Urminsky on the relationship between rewards and human efforts and motivations. The classic work on this puzzle was conducted in the 1930s by psychologist Clark Hull who noticed that rats ran faster as they moved closer to food. (Food they could see on a straight runway, that is.) Sensing the propinquity of the reward, the rats worked harder to obtain it. Hull called this phenomenon the “goal-gradient” hypothesis.
Urminsky, along with Ran Kivetz of Columbia University and Yuhuang Zheng of Fordham University, turned their attention to customer reward programs to further study Hull’s hypothesis, by analyzing how the distance to a final reward affected customers’ purchasing decisions.