Neural Mechanisms Underlying Paradoxical Performance for Monetary Incentives Are Driven by Loss Aversion

Abstract

SummaryEmployers often make payment contingent on performance in order to motivate workers. We used fMRI with a novel incentivized skill task to examine the neural processes underlying behavioral responses to performance-based pay. We found that individuals' performance increased with increasing incentives; however, very high incentive levels led to the paradoxical consequence of worse performance. Between initial incentive presentation and task execution, striatal activity rapidly switched between activation and deactivation in response to increasing incentives. Critically, decrements in performance and striatal deactivations were directly predicted by an independent measure of behavioral loss aversion. These results suggest that incentives associated with successful task performance are initially encoded as a potential gain; however, when actually performing a task, individuals encode the potential loss that would arise from failure.

Influence of reward motivation on human declarative memory

“…Extrinsic motivation thus refers to doing something because it yields a tangible outcome (such as a rewarding gift) (Ryan and Deci, 2000). Very high extrinsic incentives may lead to "overmotivation" which undermines the beneficial effects of motivation and bears resemblance to loss-avoidance behavior (Chib et al, 2012;Mobbs et al, 2009), also related to activity in the ventral striatum. Intrinsic motivation refers to the drive to pursue goals that lead to a personal sense of competence and autonomy, providing inherent satisfaction and enjoyment (Ryan and Deci, 2000).…”

“…Paradoxically, the anticipation of high rewards may turn to be stressful and overly arousing, inducing threat of loss (Chib et al, 2012;Mobbs et al, 2009) and undermining potential learning gains. For example, in a foreign-language word learning experiment, Callan and Schweighofer (2008) presented Japanese participants with English words associated with either a high or low monetary reward for correct recall on a subsequent test performed several minutes later.…”

“…High rewards may thus induce 'choking under pressure' and fear of loss (Mobbs et al, 2009). Resulting anticipatory anxiety reduces activation in striatal regions (Callan and Schweighofer, 2008;Chib et al, 2012) and could be mediated by serotonin, which may potentially act opposingly to dopamine in reward-motivated behavior (Den Ouden et al, 2013;Kakade and Dayan, 2002). Thus, under specific circumstances, extrinsic reward motivation can turn into punishment avoidance and impede learning.…”

The neural underpinnings of performance-based incentives

“…First, we expect activation in reward-related areas such as the corticobasal ganglia valuation system, including the ventral striatum (vStr), to reflect the introduction and removal of monetary rewards (Bartra, McGuire, & Kable, 2013;Chib, De Martino, Shimojo, & O'Doherty, 2012;Haber & Knutson, 2010;Murayama et al, 2010;O'Doherty et al, 2004;Robbins & Everitt, 1996). We come to this conclusion, in part, on the basis of recent studies in this area that have used functional magnetic resonance imaging (fMRI) to investigate the effect of monetary incentives on performance and motivation.…”

“…The authors suggest that the introduction of monetary incentives also modulates the effort that is invested in solving a given task-a response that can be observed by BOLD signal changes in the vStr. Although other studies focused more on money's detrimental effect on intrinsic motivation and performance (Albrecht et al, 2014;Chib, De Martino, Shimojo, & O'Doherty, 2012;Mobbs et al, 2009), a common feature in all studies is the important role of the striatum, notably as it is associated with the introduction and removal of monetary rewards. In the present experiment we anticipate increased BOLD responses in the vStr during performance-based monetary rewards.…”