Paper, Plastic, or Penalty? The Motivating Force of Carrot versus Stick Incentives in Retail Settings

Marketing Department; Faculty Adviser: Deborah Small

Since 2010, dozens of cities have started imposing surcharges on disposable paper and plastic bags commonly used at grocery and retail stores. In response, some retailers have turned this “stick” incentive into a “carrot” by offering shoppers discounts for bringing reusable bags. Which form of incentive will be more effective at changing consumer behavior, and how will these incentives influence consumers’ perceptions of the retailer?

We seek to study the influence of carrot versus stick (i.e., reward vs. penalty) incentives on prosocial behavior. So far, across four laboratory studies assessing actual behavior, we have shown that carrots outperform sticks because they allow people to feel more responsible for their good behavior, and thus more virtuous.

Next, we hope to test our findings in a real world setting by partnering with a store in Philadelphia. Through this field study, we hope to demonstrate our effects in a real consumer situation of clear importance to retailers. The results of this research will help retailers understand the significance of thinking carefully about which types of incentives to use in which contexts. Moreover, it will help shred light on how retailers can best respond to growing consumer interest in environmental sustainability and social impact.