The effects of retroactive rewards on participating in online governance

To what extent do monetary rewards encourage people to participate in democratic governance? A long literature in political science and political economy studies the determinants of democratic participation, but opportunities to empirically vary rewards for participating are extremely rare. We take advantage of a novel quasi-experiment involving a blockchain startup, Optimism, that “airdropped” token rewards to active governance participants.

Studying 1,025,787 unique Optimism wallets, we first show that the announcement of the airdrop caused a large increase in token delegation — our main measure of participation — in anticipation of earning future rewards. This increase is especially large for wallets that had not previously delegated their tokens. Next, using a lagged-DV design to account for pre-treatment heterogeneity in token wealth and governance participation, we find that receiving a reward for past participation directly increases the rate at which addresses subsequently delegate their tokens. Moreover, rewarded addresses delegate more voting power to other addresses instead of to themselves, and effects are stronger for smaller tokenholders — indicating a broadening of democracy. Together, the results show that monetary rewards can meaningfully increase participation in online democratic systems, at least temporarily.

About the researchers

Andrew B. Hall is the Davies Family Professor and Professor of Political Economy at the Stanford Graduate School of Business, with a joint appointment in the Stanford University Political Science Department. Hall’s research team uses large-scale quantitative data and cutting-edge methods from econometrics, statistics, and computer science to study how to build better-functioning systems of governance. Along with this research, Hall works at the intersection of tech and society, advising tech companies, startups, blockchain protocols, and others on how to make better and more socially legitimate decisions, products, and policies.

Eliza R. Oak is a PhD student in political science at Yale advised by Alan Gerber, also pursuing an MA in statistics. Broadly, she studies questions related to political behavior, the design of democratic institutions, and emerging tech and society, with a particular interest in decentralized governance.