Researchers including one of an Indian origin have suggested that when there are high financial incentives to succeed, people can become so afraid of losing their potentially lucrative reward that their performance suffers.
It is a somewhat unexpected conclusion. After all, you would think that the more people are paid, the harder they will work, and the better they will do their jobs—until they reach the limits of their skills.
That notion tends to hold true when the stakes are low, said Vikram Chib, a postdoctoral scholar at the California Institute of Technology (Caltech).
Previous research, however, has shown that if you pay people too much, their performance actually declines.
Some experts have attributed this decline to too much motivation: they think that, faced with the prospect of earning an extra chunk of cash, you might get so excited that you will fail to do the task properly.
But now, after looking at brain-scan data of volunteers performing a specific motor task, the Caltech team said what happens is that you become worried about losing your potential prize. The study said more someone is afraid of loss, the worse they perform.