Don’t take away my status! – Evidence from the restructuring of a virtual reward system

In a natural experiment on a popular German Question & Answer community we investigate how user status demotion affects user activity levels in online communities. The virtual reward system on this platform is designed to activate the status seeking behavior of its members. The members’ status within the community is represented by the member’s rank. In the experiment the platform operator restructured the virtual reward system, in the process reducing or abolishing the incentives for selected activities on the platform. After restructuring nearly all users saw their status demoted, with almost three quarters having lost one rank, and more than a quarter having lost two or more ranks. We identify the impact of status demotion by comparing how the members in these two groups respond to the restructuring. We find that users who lost two or more ranks reduce their post-event activities for which the incentives were reduced or abolished by 18% more than those who lost only one rank, and by 9% more than the latter for activities which were unaffected by the event.