Think for a moment about service providers and beneficiaries. The issue is to motivate service providers to do a good job in providing services for beneficiaries. I am thinking about this in the context of development research, and so the focus is often on public service providers. But I think the concerns here could apply to private (whether non-profit or for-profit) actors as well.
Would-be beneficiaries are sometimes called upon to rate the quality of services provided.
At least in development research, beneficiary ratings are often interpreted as “monitoring” in the service of holding service providers accountable. Examples of this include Olken’s study on community monitoring of infrastructure spending, scorecard programs, and other “social accountability” arrangements. (Of course there are also examples that are closer to home, like student evaluations for professors.)
When ratings are used for “monitoring,” they are tied to threats that are meant to keep service providers honest. Maybe the threat is for the ratings to be passed on to higher authorities who have some kind of sanctioning power. Maybe the threat is just some kind of more diffuse social sanction.
But I want to propose that there is another way to view beneficiary ratings: as feedback rather than monitoring. To see what I mean, step outside the realm of development and think instead of things like Amazon seller ratings and Yelp reviews. In these cases, the reviews are not tied to any real sanctioning. Rather, the feedback serves different purposes.
First, it may help the service providers to know what they are doing well and what they are doing poorly. This information can in itself help to improve service delivery.
Second, the ratings can function as a tool that service providers use to win new clients. (E.g., restaurants may like Yelp reviews because when they get good reviews, they have a tool for winning the trust of new patrons.) Of course, the importance of this function will depend on the extent that a service provider benefits from winning the confidence of new people. Not all services would fall into this category but many may. (Indeed these thoughts came about during a discussion of strategies for extending the reach of basic health services via community health workers, where it was important to win the trust of new potential clients.) An institution that ensures that (i) good deeds are recognized and, through their recognition, (ii) allows for ratings to be used to gain new clients, would induce higher quality service provision as well.
This “monitoring” versus “feedback” distinction can have higher order “selection” effects too. You could imagine that the introduction of a punitive monitoring approach may disincline some people from taking up jobs as service providers. By contrast the feedback approach may provide assurance and induce some to take up such jobs. The point is that the manner in which the ratings system is presented and used may affect the types of people who become service providers. (This is a pretty basic adverse selection argument.)