“Pay Enough Or Don’t Pay At All”, 2000-08 (; backlinks):
Economists usually assume that monetary incentives improve performance, and psychologists claim that the opposite may happen.
We present and discuss a set of experiments designed to test these contrasting claims. [An IQ test, and charitable donation]
We found that the effect of monetary compensation on performance was not monotonic. In the treatments in which money was offered, a larger amount yielded a higher performance. However, offering money did not always produce an improvement: subjects who were offered monetary incentives performed more poorly than those who were offered no compensation.
Several possible interpretations of the results are discussed.
View PDF: