When to Use Extrinsic Rewards to Motivate People (Without Killing Intrinsic Motivation)

You’ve probably heard that extrinsic rewards destroy motivation. And in many cases, that’s true. But the full picture is more nuanced than “rewards bad, passion good.”

There are specific situations where extrinsic rewards are exactly the right call. The trick is knowing when to deploy them, when to pull them back, and how to transition users toward the kind of motivation that sustains itself.

About the Creator of the Octalysis Framework

Yu-kai Chou created the Octalysis Framework after studying gamification since 2003, years before the term entered mainstream vocabulary. As a Human-Systems Architect & Behavioral Designer, his framework has been applied by LEGO, Microsoft, Porsche, Coca-Cola, Salesforce, and MrBeast, impacting over 1.5 Billion Users.

Chou has taught the Octalysis methodology at Harvard, Stanford, Yale, Tesla, Google, BCG, and IDEO.

His work has been cited by Harvard, Stanford, MIT, Forbes, Wall Street Journal, Wired, US Department of Energy, NIST, NSF, NCBI, US Department of Education, ClinicalTrials.gov, and 3,700+ more academic publications. Explore his books here.

The Advantages of Extrinsic Motivation Design

(Below is adapted from Actionable Gamification: Beyond Points, Badges, and Leaderboards.)

Designing for Extrinsic Motivation is not all negative. Besides enhancing a person’s focus on completing monotonous routine tasks, it also generates initial interest and desire for the activity.

Often, without extrinsic motivation during the Discovery Phase (before people first try out the experience), people do not find a compelling reason to engage with the experience in the first place.

Promoting, “You will get a $100 gift card if you sign-up,” usually sounds more appealing than “You will use your creativity and be in a fun state of unpredictability with your friends!” (Though both actually use Core Drive 6: Scarcity & Impatience.)

When people consider themselves “too busy,” they won’t justify spending time to try out your experience. But when you offer them an extrinsic reward to try out the experience, they will at least test it out, assuming of course that the reward is not an insult to the value of the user’s time investment.

Rewarding users $2 for trying a new search engine for an entire month is pretty weak, while paying people $3 to spend weeks going to stores, taking pictures, and sharing them with their friends is also a path to failure.

It is better to not give them a reward at all!

The Octalysis View: Left Brain vs Right Brain

Within the Octalysis Framework, the extrinsic-intrinsic divide maps directly onto the left and right sides of the octagon.

Left Brain Core Drives (Extrinsic Motivation) include Core Drive 2: Development & Accomplishment, Core Drive 4: Ownership & Possession, and Core Drive 6: Scarcity & Impatience. These are result-oriented. You do the activity to get something. Once you get it, you stop.

Right Brain Core Drives (Intrinsic Motivation) include Core Drive 3: Empowerment of Creativity & Feedback, Core Drive 5: Social Influence & Relatedness, and Core Drive 7: Unpredictability & Curiosity. These are experience-oriented. The activity itself is the reward.

Here’s the key insight: people would actually pay for Right Brain experiences. Think about casino gambling. Objectively, the expected payout is worse than a guaranteed salary. But people spend money to gamble because the experience of unpredictability and social energy is intrinsically engaging.

Left Brain rewards get people through the door. Right Brain experiences keep them in the room.

The Overjustification Trap

In 1971, psychologist Edward Deci ran an experiment that changed how we think about rewards. He gave college students a Soma cube puzzle that they already found interesting. Then he started paying them to solve it.

When the money stopped, the students who had been paid spent less time on the puzzle than they had before the experiment began. The control group, who were never paid, kept playing just as much as before.

This is the Overjustification Effect: when you introduce external rewards for an activity someone already enjoys, you shift their internal narrative from “I do this because I love it” to “I do this because I’m paid to.”

Remove the payment and they think, “Why would I do this for free? I’m not stupid.”

But before the payment, they did it for free all the time.

As I write in Actionable Gamification, if people continuously justify doing something for high extrinsic rewards, their intrinsic motivation dwindles as the Overjustification Effect settles in. One of the best ways to get someone to stop drawing is to first pay them to do it.

The Candle Problem tells a similar story. In Sam Glucksberg’s 1962 experiment, participants who were offered cash prizes ($5 and $20, roughly $53 and $213 today) to solve a creative problem actually solved it slower than those offered nothing. Extrinsic rewards narrow your thinking. They push you toward the obvious, safe path instead of the creative one.

This is why understanding how Core Drives interact matters so much. Pile Left Brain rewards onto an activity that was already driven by Right Brain motivation, and you can destroy the very thing that made it work.

The Extrinsic-to-Intrinsic Transition

So if extrinsic rewards can kill intrinsic motivation, why use them at all?

Because most experiences have a cold-start problem. Nobody has intrinsic motivation for something they’ve never tried.

Michael Wu, former Chief Scientist at Lithium Technologies (now Khoros), described a model I find quite useful. You attract people with Extrinsic Rewards (gift cards, money, merchandise, discounts), transition their interest through Intrinsic Rewards (recognition, status, access), and finally use Intrinsic Motivation to ensure long-term engagement.

In Octalysis terms, this maps to a journey across the four Experience Phases:

• Discovery Phase: Heavy Left Brain. Use Core Drive 2 (accomplishment badges), Core Drive 4 (free trial ownership), and Core Drive 6 (limited-time offers) to get people through the door.
• Onboarding Phase: Begin introducing Right Brain elements. Let users experience Core Drive 3 (creative choices), Core Drive 5 (community interaction), and Core Drive 7 (curiosity about what comes next).
• Scaffolding Phase: Gradually reduce extrinsic rewards. By now, users should care about the experience itself. If they don’t, your product has a deeper problem that no reward can fix.
• Endgame Phase: Primarily Right Brain. The remaining users stay because the activity is meaningful, social, and creatively engaging. Extrinsic rewards become occasional surprises, not the main attraction.

Through this process, users start to enjoy the activity so much that they focus on relishing the experience itself without thinking about what can be gained from it.

Modern Examples of the Reward Transition

Duolingo is one of the best examples of this transition in action. New users are flooded with XP, gems, streak rewards, and leaderboard placements (Left Brain). These extrinsic hooks get people through the first painful weeks of language learning. But over time, the daily streaks become a point of personal pride (shifting from CD2 Accomplishment to CD4 Ownership). The community features and personalized learning paths create real engagement. Long-term Duolingo users keep learning because they care about the skill, not the gems.

Habitica takes a different approach. It wraps habit-building in RPG mechanics: gold coins, experience points, gear upgrades, group quests. All extrinsic. But the RPG framing gives users Core Drive 1 (Epic Meaning) from day one. You’re not just checking off a to-do list, you’re leveling up your character. The real-life habits become intrinsically satisfying because they’re tied to a narrative that you care about.

Strava hooks runners with segment leaderboards and personal records (Core Drive 2). Over time, the social features (kudos, group challenges, following friends’ routes) create Core Drive 5 engagement that keeps people running long after the initial novelty of leaderboard placement fades.

When Extrinsic Rewards Work (And When They Backfire)

Use extrinsic rewards when:

• The task is boring or repetitive (data entry, compliance training, routine health checks)
• Users have no prior relationship with your product (Discovery Phase cold-start)
• You need short-term behavior change and have a plan to transition to intrinsic motivation
• The reward signals respect for the user’s time (a meaningful incentive, not an insulting token)

Pull back extrinsic rewards when:

• Users already show intrinsic interest (adding rewards will trigger the Overjustification Effect)
• The task requires creativity or complex problem-solving (rewards narrow thinking)
• You’re using rewards as a substitute for good design (if the experience isn’t engaging without rewards, fix the experience)
• The reward is too small to matter but large enough to shift the motivational frame (“I’m doing this for $2” feels worse than “I’m doing this because I want to”)

The bottom line: extrinsic rewards are a tool, not a strategy. Use them to open the door. Then build an experience worth staying for.

Related Reading

• Creating Intrinsic Motivation via Octalysis Gamification
• How Extrinsic Rewards Turn Off Our Social Brain
• The Octalysis Framework for Gamification & Behavioral Design
• How the 8 Core Drives Interact: Cocktail Effects and the Over-Justification Trap
• What is Gamification?
• Self-Determination Theory: The Complete Guide to Ryan and Deci’s SDT Framework
• Motivation Traps of Reward-Based Gamification Campaigns
• Books by Yu-kai Chou

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