So far, the research seems to suggest it’s the exact opposite. More rewards = less motivation, and more rewards = poorer performance.
Florida State University professor Roy Baumeister had college students play a videogame, and they did really well. Then a grad-student confederate would enter the room and give the players a compliment. Immediately, they lost the game. They stopped paying attention to the game; they were too focused on the person assessing their performance.
Researchers have found that people are sometimes happier and more effective when they do a task for no money at all than when they receive a small payment. If someone offers a good Samaritan $5 for helping with a flat tire, then he starts thinking about the actual market rate for tire-changing, so a fiver is now insufficient—when a minute ago, he’d have been perfectly content with $0.
In those classic rat-maze experiments, rats didn’t keep improving as the incentives increased (i.e., the electric shocks got stronger). Instead, their progress was more of an inverse U. For a while, escalating the shock stakes did catalyze success. However, after a certain point, increasing them even further only backfired; their performance worsened.
Then there’s a study recently published in The Review of Economic Studies by Daniel Ariely—the economist who authored Predictably Irrational.
Ariely’s team went to a village in rural India, where they asked people to play a series of games. Successful performance in the games would earn some participants a nice compensation (four rupees per game), but other participants could earn as much as 400 rupees in a single game. For most people in the area, that was equivalent to a month’s salary. Apparently, the enormity of that amount was more than they could psychologically handle. Those who could earn the most performed the worst.
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