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

Vikram S. Chib, Benedetto De Martino, Shinsuke Shimojo, John P. O'Doherty

Research output: Contribution to journalArticlepeer-review

Abstract

Employers 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.

Original languageEnglish (US)
Pages (from-to)582-594
Number of pages13
JournalNeuron
Volume74
Issue number3
DOIs
StatePublished - May 10 2012
Externally publishedYes

ASJC Scopus subject areas

  • Neuroscience(all)

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