Contingency Contracting: Definition, Examples & Benefits

Contingency contracting refers to a written agreement (i.e. a contract) where rewards or payments are only provided following the achievement of agreed-upon goals.

This method is useful in a wide range of fields, including:

• Education: A trouble-making student signs a contract where they will receive a reward if they meet behavioral benchmarks after a certain amount of time. These are also known as behavior contracts.
• Parenting: Parents offer rewards, such as pocket money, on the condition that certain tasks around the house are completed.
• Therapy: A client signs an agreement with the therapist, where a reward is provided following completion of the agreement.
• Construction: A construction company is only paid upon the completion of work.
• Business Sales: A seller may receive an ‘earnout’ where they receive a portion of the agreed price of the business only if it reaches certain ongoing profit benchmarks after a specified amount of time.
• Workplace Bonuses: Receiving an end-of-year bonus for meeting exceptional KPIs.

Such a contract creates incentives for one party to engage in goal directive behaviors and meet or exceed expectations. In business transactions, it will also reduce the financial risk for the client, because they only pay if certain benchmarks are met.

Contingency Contracting Definitions

A simple scholarly definition of the contingency contract (CC) is provided below:

“[It] involves a written document indicating the contingencies for rewards in the form of if-by-then statements (if a certain target behavior is demonstrated by a certain extent or a certain time, then a token is given)” (Grunke, 2019, p. 48)

Key features include:

• Co-creation and mutual agreement: The contract should be co-written by all involved parties, including explicit agreement upon the contingencies (rewards or punishments). Coercion may decrease the likelihood of the desired outcomes.
• Explicit rules and structure: Unlike other behavior management methods, the contract makes the rules, structure, expectations, goals, and outcomes of the agreement crystal clear.
• Delayed gratification: Rewards and incentives come at the end of the contract’s term.
• Self-monitoring: Throughout the term of the contract, the person or entity under contract must self-monitor to ensure they reach the goals. In other words, they are encouraged to engage in goal-directed behaviors (Alwahbi, 2020).

Types of contracts can include:

• Incentive Contracts (Positive Reinforcement): This is the straightforward method, where a reward, bonus, or incentive is provided at the end of the term of the contract if the goals have been met.
• Loss Aversion Contracts (Negative Reinforcement): This occurs when the person loses something if they do not meet the contractually-agreed upon goals. A common method for this is to have a person hand over their own money to a third party, which they can only get back if they meet the contingencies in the contract.
• Earnouts: Common in business, this involves gradual (usually monthly or quarterly) payouts to the seller of a business if the business reaches expected benchmarks agreed upon prior to the sale. This helps the buyer to finance the deal and know the seller is confident in the business’s longevity.

Examples of Contingency Contracts

1. Improving Writing Skills

A study by Newstrom, McLaughlin & Sweeney (1999) involved the use of a contract with a student whose writing skills, specifically capitalization and punctuation, needed improvement.

The contract, written by the student himself, involved free computer time as the reward if the contractual obligations were met.

At the completion of the study, “proper capitalization and punctuation significantly increased”, demonstrating the contract’s efficacy.

While the study used valid and thorough research methods, with just one research participant, these findings are not generalizable (see related study: Grunke, 2019).

2. Contracts for Children with Autism

Several studies have demonstrated the efficacy of contingency contracts for helping children with autism to develop prosocial skills.

For example, Alwahbi and Hua (2020) demonstrated that contingency contracts can work in situations where children with autism fail to improve their social skills through peer training, modeling and observation.

Similarly, Mruzek, Cohen & Smith (2007) demonstrated the utility of contracts for helping reduce instances of tantrums and antisocial vocalizations among children with autism.

This research demonstrates the value of contracts for helping children with autism: explicit instructions, rules, and goals need to be provided, rather than implicit social learning which may suffice for neurotypical children.

3. Weight Management

Multiple studies have demonstrated the value of CCs for both weight loss (Chagolla, 2020; Budworth et al., 2019; Scull, 2013) and weight gain (Ziser et al., 2018).

For example, Budworth et al. (2019) used loss aversion tactics by having participants hand-over money to a third party, which they would only receive back if they meet weight loss goals. Similarly, Scull (2013) used contracts to minimize late night snacking with four research participants. In both instances, contracting was found to be useful.

Similarly, weight gain can be encouraged among teen girls (Ziser et al., 2018) through contracts connected to financial, social, and technology rewards.

4. Exercise

Exercise is another behavior that is commonly treated with contingent and goal-directed contracts (Erath & DiGennaro Reed, 2022; Hernandez, 2017; Martinez, 2019).

Hernandez (2017), for example compared negative reinforcement contingency contracts to the use of feedback in increasing daily step count. One group of participants completed contingency contracts (the ‘contract condition’) and the other group received feedback, without attached reinforcements for successful completion of daily goals (the ‘feedback condition’). This study found that contracts were more effective than feedback alone in increasing step counts and meeting pre-determined goals.

Another study used contracts that would provide monetary incentives for work-from-home employees to take regular breaks from sitting in order to decrease prolonged sedentary time (Erath & DiGennaro Reed, 2022). This study, which had a cohort of 6 research participants, found 4 of the 6 participants met their contractual goals, demonstrating moderate efficacy of the contract intervention.

Limitations and Further Considerations

While research demonstrates that CCs generally deliver positive results as compared to baseline or control conditions, this does not mean they are always the optimal mechanism for reinforcing goal-directed behaviors.

One primary concern with most consequence-based conditioning procedures is that they tend to create a simplistic association between behaviors and extrinsic rewards (Dubreil & Fabre, 2022). This diverts our attention away from the most ideal form of goal-directed behavior: intrinsic desire.

As Lepper and Greene (2015) argue, there are “detrimental effects of extrinsic rewards on subsequent intrinsic motivation“, meaning motivation may fall off a cliff after the intervention is completed.

If we can create conditions where goal-directed behaviors are engaged in for the intrinsic value of the task, we often find that the behaviors continue long after an intervention (such as a contract) is completed (Lepper & Greene, 2015).

Nevertheless, this procedure is evidently useful in a wide range of situations, including in habit-forming (which may be sustained long after a study is completed), among children with autism (ASD), and in interactional business contexts.

Conclusions

Contingency contracts appear in the literature to generally have positive outcomes, acting as incentives to encourage goal-directed behavior. Such contracts tend to adhere closely to operant conditioning principles of reward-and-punishment, which increase the likelihood of target behaviors. One of the most valuable apparent use cases for CCs is for children with autism who tend to respond well to explicit and black-and-white rules and structures (Clo & Dounavi, 2020).

References

Alwahbi, A. (2020). The Use of Contingency Contracting in Educational Settings: A Review of the Literature. Educational Research and Reviews, 15(6), 327-335.

Alwahbi, A., & Hua, Y. (2021). Using contingency contracting to promote social interactions among students with ASD and their peers. Behavior Modification, 45(5), 671-694. (Source)

Budworth, L., Prestwich, A., Sykes-Muskett, B., Khatun, K., Ireland, J., Clancy, F., & Conner, M. (2019). A feasibility study to assess the individual and combined effects of financial incentives and monetary contingency contracts on physical activity. Psychology of Sport and Exercise, 44, 42-50. (Source)

Chagolla, G. A. (2020). Evaluation of a behavior contract to manage portion control in an adolescent with ASD (Doctoral dissertation, California State University, Sacramento).

Clo, E., & Dounavi, K. (2020). A systematic review of behaviour analytic processes and procedures for conditioning reinforcers among individuals with autism, developmental or intellectual disability. European Journal of Behavior Analysis, 21(2), 292-327. (Source)

Dubreil, J. & Fabre, E. (2022). The pitfalls of the contingency contract. Cliniques, 23, 154-168. (Source)

Erath, T. G., & DiGennaro Reed, F. D. (2022). Technology‐based contingency management for walking to prevent prolonged periods of workday sitting. Journal of Applied Behavior Analysis, 55(3), 746-762. (Source)

Grunke, M. (2019). The Effects of Contingency Contracts on the Correct Use of Punctuation Marks in Elementary Students with Learning Disabilities. Insights into Learning Disabilities, 16(1), 47-57.

Hernandez, D. A. (2017). Comparing the effects of negative reinforcement contingency contracts and goal setting on increasing adults’ physical activity (Doctoral dissertation, California State University, Sacramento). (Source)

Lepper, M. R., & Greene, D. (2015). Overjustification research and beyond: Toward a means—ends analysis of intrinsic and extrinsic motivation. In The hidden costs of reward (pp. 109-148). Psychology Press.

Martinez, J. (2019). Evaluating the Effects of Monetary Consequences on Adults’ Physical Activity Using Contingency Contracting (Doctoral dissertation, California State University, Fresno).

Mruzek, D. W., Cohen, C., & Smith, T. (2007). Contingency contracting with students with autism spectrum disorders in a public school setting. Journal of Developmental and Physical Disabilities, 19, 103-114. (Source)

Newstrom, J., McLaughlin, T. F., & Sweeney, W. J. (1999). The effects of contingency contracting to improve the mechanics of written language with a middle school student with behavior disorders. Child & family behavior therapy, 21(1), 39-48.

Scull, C. T. (2013). Utilizing habit reversal and contingency contracting to impact eating habits with obese individuals. Graduate Thesis. University of South Florida. (Source)

Ziser, K., Resmark, G., Giel, K. E., Becker, S., Stuber, F., Zipfel, S., & Junne, F. (2018). The effectiveness of contingency management in the treatment of patients with a**rexia nervosa: A systematic review. European Eating Disorders Review, 26(5), 379-393.