Friday, October 30, 2009

Another Reason Broke is Beautiful

Higher pay equals worse performance.

At least that it the result of one study as reported in

Economist Dan Ariely, who just presented at Pop!Tech, created a series of experiments for which he promised people money for performing well.

One group was promised a day’s wages for doing well at these tasks. Another group was offered more. A third group was offered a full five months’ salary.

As the chart here shows, the group with the largest monetary incentive performed the most poorly. How come? Ariely concludes that when stakes are really high, people get more anxious about doing well, and that anxiety actually hurts their performance.