People fail when stakes are high, study finds

High stakes and financial bonanzas offered in sports or game shows actually drive participants to perform poorly because of the fear of losing their potentially lucrative reward, a new study says.

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, the study adds.
That notion tends to hold true when the stakes are low, says Vikram Chib, post-doctoral scholar at Caltech (California Institute of Technology), who led the study.

Previous research, however, has shown that if you pay people too much, their performance actually declines, the journal Neuron reports.

Some experts have attributed this decline to too much motivation. Faced with the prospect of earning an extra chunk of cash, they might get so excited that they might fail to do the task properly, according to a Caltech statement.

But now, after looking at brain-scan data of volunteers performing a specific task, the
Caltech team says that what actually happens is that you become worried about losing your potential prize. They also found that the more someone is afraid of loss, the worse they perform.

The task began with the researchers offering the participants a randomised range of rewards - from $0 to $100 - if they could successfully place the object into the square on a computer screen within the time limit.

At the end of hundreds of trials - each with varying reward amounts - the participants were given their rewards, based on the result of just one of the trials, picked at random.

As expected, the team found that performance improved as the incentives increased, but only when the cash reward amounts were at the low end of the spectrum.

Once the rewards passed a certain threshold, which depended on the individual, performance began to decline.