Mind: Big Incentives Can Hinder, Rather than Help

Financial incentives can spur us to success--up to a point. When the stakes get too high, performance can suffer, according to a new paper from researchers at California Institute of Technology. By studying brain-scan data of volunteers performing a basic motor task (controlling an object on a screen) for money, the Caltech team found that once the incentive for successfully completing the task hit a certain threshold, the brain's reward center began to shut down, a response tied to loss aversion.

Previous studies have suggested that success rates decline with high incentives because people can be too motivated, but the newest research suggests otherwise, finding positive responses in the reward-response area only when the incentive was first introduced. In other words, participants responded well to the initial incentive but grew distracted once the task was under way.

For more, see Big Incentives Can Hinder, Rather than Help by Melissa Korn, May 15, 2012 at WSJ.com.