Massive Open Online Courses (MOOCs) have the potential to democratize education by improving access. Although retention and completion rates for non-paying users have not been promising, these statistics are much brighter for users who pay to receive a certificate upon completing the course. We investigate whether paying for the certificate option can increase engagement with course content. In particular, we consider two such effects: (a) the certificate effect, which is the boost in motivation to stay engaged in order to receive the certificate; and (b) the sunk-cost effect, which arises solely because the user paid for the course. We use data from over 70 courses offered on the Coursera platform and study the engagement of individual participants at different milestones within each course. The panel nature of the data enables us to include controls for intrinsic differences between non-paying and paying users in terms of their desire to stay engaged. We find evidence that the certificate and sunk-cost effects increase user engagement by approximately 8%-9%, and 17%-20%, respectively. However, whereas the sunk-cost effect is transient and lasts only for a few weeks after payment, the certificate effect lasts until the participant reaches the grade required to be eligible to receive the certificate. We discuss the implications of our findings for how platforms and content creators may want to design course milestones and schedule the payment of course fees. Given that greater engagement tends to improve learning outcomes, our study serves as an important first step in understanding the role of prices and payment in enabling MOOCs to realize their full potential.
Entry- and Sunk-Cost Spillovers from the Rival: Evidence from Entry and Expansion of KFC and Mcdonald's in Chinese Cities