Abstract 

Traditionally, multi-level effort-reward structures involve smooth, continuously increasing difficulty in the ratio of efforts to rewards across levels. This paper proposes a pinch-point effort-reward structure, which has sequences of gentle effort-reward levels followed by a steep effort-reward level. A field experiment in a freemium game context shows that this effort-reward structure leads to higher in-app purchases without increasing user churn (Study 1). A series of online studies provides evidence that inertia is the mechanism driving this result, which is robust to the steepness of the pinch point, the size of the rewards, the focus on winning versus not losing, also investigating the proportion of gentle-to-steep levels (Studies 2a-d). Field data reveals that much of the conversion from a free to paid user and churn happens at the beginning of the steep level and that the inertia users generate increases in-app purchase at the steep level (Study 3). The benefits of pinch-point structures appear generalizable to other contexts, such as streaming platforms and language learning (Study 4). These findings contribute to marketing theory by providing evidence of the proposed framework of behavioral inertia and offer managers insights into customer behavior in multi-level effort-reward programs with a pinch-point structure.

Please contact dip.mkt@unibocconi.it if you wish to attend the seminar.