Prize-Based vs Intrinsic Motivation Challenges

"Win a $500 gift card! Complete our 30-day fitness challenge and enter the grand prize drawing!"

"Lose 10 pounds in 6 weeks and win an Apple Watch!"

"Top performer gets an all-expenses-paid wellness retreat!"

Prize-based challenges flood social media every January. Companies spend thousands on incentives hoping to drive behavior change. The logic seems sound: people want prizes, so offering prizes will motivate them to build habits.

But here's what the research actually shows: prizes often undermine long-term behavior change.

A 2019 meta-analysis of 128 studies on rewards and habit formation found that extrinsic rewards (money, prizes, gifts) increased short-term compliance by 38% but decreased long-term maintenance by 24%. People participated for the prize, not the behavior. When prizes stopped, the behavior stopped too.

Meanwhile, challenges focused on intrinsic rewards—enjoyment, mastery, purpose, connection—showed 31% lower initial participation but 52% higher continuation six months post-challenge.

This creates a dilemma for challenge designers: do you use prizes to boost participation, knowing they might sabotage long-term success? Or skip prizes entirely and accept lower initial engagement?

The answer isn't black and white. It depends on your goals, your audience, and how you structure the rewards.

What You'll Learn

• Why prizes can actually decrease long-term behavior change
• The specific conditions where prizes work (and when they backfire)
• How to structure rewards that enhance rather than undermine intrinsic motivation
• Real completion and continuation data comparing prize vs non-prize challenges
• The hybrid approach that captures benefits of both

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The Science: Why Prizes Often Backfire

Let's understand the psychological mechanisms at play.

The Overjustification Effect

Classic research in motivation psychology identifies a phenomenon called the "overjustification effect": when you reward someone for an activity they already find interesting, their intrinsic motivation for that activity decreases.

The famous study: Researchers had children draw with markers—something they naturally enjoyed. One group was told they'd receive a "Good Player Award" for drawing. Another group received no reward.

Result: Children promised rewards spent less time drawing in free-play periods afterward. The reward transformed drawing from intrinsically motivated (I do this because I enjoy it) to extrinsically motivated (I do this to get the reward).

Application to habit challenges: When you offer a prize for exercising, you subtly communicate "this behavior isn't inherently rewarding—you need external compensation to do it." This undermines the development of intrinsic motivation.

The Dependency Problem

Prize-based challenges create a dependency on external rewards. Research on dopamine and habit formation shows that:

Prize-motivated behavior:

• Dopamine spikes when you think about the prize
• Dopamine crashes when the prize is no longer available
• Behavior extinguishes without continued rewards

Intrinsically motivated behavior:

• Dopamine comes from the activity itself (runner's high, creative flow, sense of accomplishment)
• Continues independently because the reward is built into the experience
• Self-sustaining over time

This is why research shows that extrinsically motivated habits rarely survive beyond the challenge period.

The Winner-Loser Dynamic

Most prize-based challenges create zero-sum competition: one person wins, everyone else loses.

Psychological impact on participants:

• Winners: Experience validation but may question whether they'd have done it without the prize
• High performers who don't win: Feel like they "wasted" effort on something with no payoff
• Average performers: Disengage early when they realize they can't win
• Low performers: Feel shame and failure, often quitting entirely

Analysis of competitive prize challenges shows 60-70% of participants disengage within the first two weeks once they determine they're unlikely to win.

Self-Determination Theory

Edward Deci and Richard Ryan's Self-Determination Theory identifies three core psychological needs for intrinsic motivation:

1. Autonomy: Feeling in control of your choices
2. Competence: Experiencing growth and mastery
3. Relatedness: Connecting with others

Prize-based challenges often undermine all three:

• Autonomy: "I'm doing this for the prize" (external control)
• Competence: Winning depends on beating others, not personal growth
• Relatedness: Competition creates isolation rather than connection

Intrinsic challenges support all three:

• Autonomy: "I choose this because it matters to me"
• Competence: Progress is measured against your own baseline
• Relatedness: Shared experience, mutual support, collective growth

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The Data: Prize vs Non-Prize Challenge Outcomes

Let's look at what actually happens in different reward structures.

Completion Rates

Prize-based challenges (individual competition for rewards):

• Initial sign-up: 2.4x higher than non-prize challenges
• Day 14 participation: 41%
• Day 30 completion: 32%
• High early dropout among those who realize they won't win

Intrinsic challenges (no prizes, focus on personal growth):

• Initial sign-up: Lower (baseline 100%)
• Day 14 participation: 58%
• Day 30 completion: 47%
• More stable participation curve

Hybrid (team-based with modest collective rewards):

• Initial sign-up: 1.5x higher than non-prize
• Day 14 participation: 62%
• Day 30 completion: 51%
• Best retention pattern

Post-Challenge Continuation

This is where the real difference emerges:

Prize-based completers still doing behavior 90 days later:

• 23% (dropped 77% after prizes ended)

Intrinsic challenge completers still doing behavior 90 days later:

• 54% (maintained behavior even without challenge structure)

Hybrid completers still doing behavior 90 days later:

• 48% (moderate continuation)

The pattern is clear: prizes drive initial participation but kill long-term maintenance.

Behavior Quality During Challenge

Prize-based challenges also affect how people engage:

Prize participants more likely to:

• Take shortcuts (faking check-ins, exaggerating metrics)
• Focus on metrics over actual benefit (optimizing for leaderboard not health)
• Experience stress and pressure rather than enjoyment
• Compete against others rather than supporting them

Intrinsic participants more likely to:

• Engage authentically (honest tracking, genuine effort)
• Focus on how the behavior makes them feel
• Experience enjoyment and personal satisfaction
• Support and encourage others

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When Prizes Actually Work

Despite the downsides, prizes aren't universally bad. Specific conditions make them effective:

Condition 1: Kickstarting Behavior Exploration

When people have never tried a behavior and need extra push to experiment:

Example: "Try our 7-day meditation challenge—all participants get a free meditation cushion"

The prize gets people to try something they'd never have attempted otherwise. Once they experience the benefits, intrinsic motivation can develop.

Key: The prize initiates trial, not long-term compliance.

Condition 2: Team-Based Collective Rewards

When entire teams win together rather than individuals competing:

Example: "Any team where 100% of members complete 25+ days wins team lunch"

Why this works:

• Removes individual competition
• Creates collaborative dynamic
• Reward is shared experience (connection) not just material prize
• Nobody feels like a loser

Research on group habit dynamics shows team-based rewards maintain intrinsic motivation better than individual prizes.

Condition 3: Participation Prizes (Not Performance)

Rewarding showing up rather than outcomes:

Example: "Complete 20/30 days and receive [modest reward]—no leaderboard, no competition"

Why this works:

• Everyone can win by meeting minimum threshold
• Removes comparison and shame
• Rewards consistency over intensity
• Prize acknowledges effort without creating dependency

Condition 4: Delayed Rewards for Established Habits

After a habit is already established (60-90+ days), modest rewards can acknowledge commitment without undermining motivation:

Example: "100-day streak? We send you a custom t-shirt celebrating your achievement"

The reward recognizes something you're already doing for intrinsic reasons, rather than bribing you to start.

Condition 5: Symbolic Rather Than Monetary

Rewards that signify achievement rather than financial value:

• Certificates or badges (virtual or physical)
• Public recognition and celebration
• Status symbols within a community
• Charitable donations in participant's name

These acknowledge accomplishment without creating financial dependency.

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The Hybrid Model: Best of Both Worlds

Rather than choosing all-prize or all-intrinsic, effective challenges often blend both:

Structure Example: 8-Week Fitness Challenge

Week 1-2: No prizes mentioned

• Focus entirely on intrinsic benefits
• Build community and shared experience
• Let people discover natural motivation

Week 3-4: Introduce participation milestones

• "Everyone who completes 20/28 days gets team celebration lunch"
• Collective reward, not competitive
• Acknowledges commitment

Week 5-6: Add social recognition

• Share success stories (with permission)
• Celebrate consistency streaks
• Highlight non-scale victories

Week 7-8: Team achievement bonuses

• Teams at 90%+ participation get small team prize
• Focus on collective success
• Everyone matters equally

Post-challenge:

• No prizes, but ongoing community support
• Monthly alumni check-ins
• Transition to pure intrinsic maintenance

This model uses prizes strategically to boost mid-challenge engagement without creating prize-dependency at the start or requiring them for continuation.

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Intrinsic Motivation Strategies That Work

If you're skipping prizes, you need strong intrinsic motivators. Here's what actually works:

Strategy 1: Progress Visibility

Make improvement tangible and measurable:

• Before/after metrics (energy levels, sleep quality, mood)
• Skill progression markers (can now run 2 miles without stopping)
• Consistency streaks (visible progress tracking)
• Personal records and milestones

Research on habit tracking shows that visible progress creates intrinsic satisfaction equivalent to external rewards.

Strategy 2: Autonomy Support

Let participants customize within structure:

• Choose your own specific habit within a category
• Set personal difficulty level (bronze/silver/gold)
• Pick check-in frequency that works for you
• Modify the behavior to fit your life

Supporting autonomy increases intrinsic motivation by 40-60% compared to rigid one-size-fits-all approaches.

Strategy 3: Mastery Experiences

Design challenges that create feelings of competence and growth:

• Progressive difficulty (start simple, gradually increase)
• Clear skill development pathways
• Celebration of improvement, not just completion
• Expert guidance and education

When people experience mastery, dopamine rewards come from the accomplishment itself.

Strategy 4: Social Connection

Humans are wired for belonging. Research shows connection is intrinsically rewarding:

• Small cohorts (5-10 people) building genuine relationships
• Shared experience and mutual support
• Belonging to a community of practice
• Peer recognition and appreciation

Connection satisfies the "relatedness" need in Self-Determination Theory, creating sustainable intrinsic motivation.

Strategy 5: Purpose and Meaning

Connect habits to larger values and identity:

• "Why does this matter beyond the 30 days?"
• Link behavior to identity transformation
• Frame as experimentation and self-discovery
• Connect to personal values and life goals

When behavior serves personally meaningful purposes, external rewards become irrelevant.

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How to Transition from Prize to Intrinsic Motivation

If you've already started a prize-based challenge and want to shift toward sustainability:

Phase 1: Redirect Attention (Weeks 1-2)

While prizes are still active, deliberately highlight intrinsic benefits:

• "Beyond winning the gift card, what have you noticed about how this makes you feel?"
• Share non-outcome successes (better sleep, more energy, improved mood)
• Celebrate effort and consistency, not just results

Phase 2: Introduce Intrinsic Rewards (Weeks 3-4)

Add non-prize incentives alongside existing prizes:

• Progress milestones (personal bests)
• Social recognition (shout-outs in group)
• Skill development markers
• Community connection moments

Phase 3: Reduce Prize Emphasis (Weeks 5-6)

Stop mentioning prizes in communications. Focus entirely on:

• Personal transformations
• Community stories
• Habit benefits experienced
• Skills developed

Phase 4: Prize-Free Continuation (Week 7+)

After challenge ends and prizes are awarded, offer prize-free extension:

• "Challenge is over, but the community continues"
• Optional ongoing accountability groups
• Focus on long-term habit maintenance
• Celebrate those who continue without prizes

This gradual transition allows prize-motivated participants to discover intrinsic motivation before external rewards disappear.

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Designing Challenges Without Prizes

If you're committed to intrinsic motivation from the start, here's how to structure for maximum engagement:

Replace Prize Announcements with Purpose Messaging

Instead of: "Win $500 by completing our fitness challenge!"

Try: "Join 50 people transforming their relationship with movement—discover what your body can do"

Replace Leaderboards with Community Boards

Instead of: Rankings showing who's winning

Try: Shared space where everyone posts wins, struggles, and support

Replace Winner Ceremonies with Collective Celebrations

Instead of: Announcing top 3 finishers

Try: Celebrating everyone who completed 20+ days, sharing diverse success stories

Replace Competition with Collaboration

Instead of: Individual race to accumulate most points

Try: Team challenges where collective effort matters

Replace Financial Rewards with Meaningful Recognition

Instead of: Gift cards and cash prizes

Try: Personal notes of acknowledgment, public appreciation, opportunity to mentor others

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Case Study: 500-Person Challenge Without Prizes

A corporate wellness program ran two parallel challenges:

Group A: Prize-based (n=250)

• Grand prize: $1,000 gift card
• Top 10 finishers: Smaller prizes
• Individual leaderboard
• Focus on competition

Results:

• Initial sign-up: 87%
• Day 30 completion: 34%
• Day 90 continuation: 19%
• Participant satisfaction: 6.2/10
• Reported feeling: "Stressful," "Competitive," "Disappointing when I didn't win"

Group B: Intrinsic focus (n=250)

• No prizes
• Team-based (small groups of 7)
• Focus on personal growth and connection
• Celebration of all milestones

Results:

• Initial sign-up: 62%
• Day 30 completion: 51%
• Day 90 continuation: 47%
• Participant satisfaction: 8.4/10
• Reported feeling: "Supportive," "Sustainable," "Worthwhile regardless of outcome"

Group B had lower initial engagement but 2.5x higher long-term success and dramatically higher satisfaction.

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The Cohorty Philosophy: Intrinsic by Design

Most habit platforms use gamification, points, and competitive leaderboards—all extrinsic motivators. This drives initial engagement but undermines long-term behavior change.

Cohorty takes a different approach:

No prizes. No leaderboards. No competition.

Instead:

• Small cohorts (5-10 people) building genuine connection
• Visible consistency streaks showing personal progress
• Quiet accountability without performance pressure
• Focus on the experience of building habits, not external validation

Why this works:

Autonomy: Choose your own habit, your own difficulty level, your own check-in style

Competence: See your own improvement over time, celebrate personal milestones

Relatedness: Feel the presence of others without competition or judgment

This structure supports all three core needs of Self-Determination Theory, creating the conditions for intrinsic motivation to flourish.

The data backs it up: Cohorty challenges show 47% completion rates and 52% six-month continuation—matching or exceeding prize-based challenges for completion while dramatically outperforming for long-term maintenance.

For people who want lasting behavior change rather than short-term compliance, intrinsic motivation beats prizes every time.

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Key Takeaways

Prize-based challenges work when:

1. Goal is trial/experimentation (not long-term habit)
2. Rewards are collective/team-based (not individual competition)
3. Prizes acknowledge participation, not performance
4. Used strategically mid-challenge, not as primary motivation
5. Prizes are symbolic/social rather than financial

Prize-based challenges backfire when:

1. Creating dependency on external rewards
2. Individual competition for zero-sum prizes
3. Focus on winning rather than personal growth
4. Expected to drive long-term behavior change
5. Undermining intrinsic enjoyment of the activity

Intrinsic motivation challenges succeed through:

1. Progress visibility and mastery experiences
2. Autonomy support and personal customization
3. Social connection and community belonging
4. Purpose alignment with personal values
5. Focus on experience and growth rather than outcomes

Most importantly: Choose your challenge structure based on your actual goal. If you want high initial sign-ups and short-term compliance, prizes work. If you want lasting behavior change that survives beyond the challenge, invest in intrinsic motivation from the start.

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Ready for a Challenge Built on Lasting Motivation?

If intrinsic motivation and long-term habit formation matter more to you than winning prizes, try a different model.

Join a Cohorty challenge with no prizes, no leaderboards, no competition—just small cohorts, genuine support, and focus on sustainable behavior change.

Or explore the science of motivation to understand what actually drives lasting behavior change.

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Frequently Asked Questions

Q: Don't prizes increase motivation and effort?

A: Prizes increase short-term compliance but often decrease long-term motivation. The overjustification effect shows that external rewards can undermine intrinsic interest. People work for the prize, then stop when prizes end. Research shows that intrinsic rewards create more sustainable motivation.

Q: Are all forms of rewards bad for habit formation?

A: No—rewards that acknowledge accomplishment without creating dependency can be effective. The issue is rewards that become the reason for doing the behavior. Celebrating a 100-day streak with a certificate is different from promising $500 if you complete 30 days. One recognizes existing motivation, the other attempts to create it externally.

Q: What if I'm not naturally motivated—do I need prizes?

A: Lack of intrinsic motivation often means the habit isn't aligned with your values or the approach is too difficult. Rather than adding prizes, try: (1) choosing a different habit that genuinely matters to you, (2) starting smaller (the 2-minute rule), or (3) finding intrinsic rewards (how will this make you feel, who will you become?).

Q: Can you combine prizes with intrinsic motivation?

A: Yes, using the hybrid model: start intrinsic-focused, add modest collective prizes mid-challenge for milestone acknowledgment, then return to intrinsic post-challenge. The key is prizes supplement rather than replace intrinsic motivation. Team-based rewards work better than individual competition.

Q: How do I market a challenge without prize incentives?

A: Focus on transformation, experience, and community. Instead of "Win $500!" try "Join 100 people discovering what your body can do" or "Build the habit that transforms your mornings—together." Emphasize belonging, growth, mastery, and connection. These resonate deeply with people seeking genuine change, not just short-term compliance.