Thursday, November 27, 2008
The Wall Street Bonus degrades rather than enhancing performance.
Dan Ariely, a professor of behavioral economics at Duke, reports interesting work showing that people perform better on tasks requiring cognitive skills when they are not offered huge rewards. Social pressure has the same effect that money has. It motivates people, especially when the tasks at hand require only effort and no skill. But it can provide stress, too, and at some point that stress overwhelms the motivating influence.