The cognitive downside of a promised bonus

Managers often get exorbitant bonuses if they do well for the company. But does a promised bonus actually help people to perform better? We now know from our research described in Psychological Science that not everyone's performance will increase when a reward is anticipated.

Bonus culture illustrated by Boomerang

Bonus culture illustrated by Boomerang

In our study, we had participants do a difficult task on the computer that required lots of focused attention. On half of the trials we promised our participants a high monetary reward for good performance and on the other half a low reward. You would think that everyone would do better when promised a high versus a low reward. Yet, results of previous studies with a similar set-up are rather inconsistent. Could it be that some would benefit from a promised bonus, whereas others would actually do worse? And if so, then would such individual differences correspond with differences between these individuals’ brains?

We already had a clue where to look: the brain chemical called dopamine. Dopamine makes us want stuff; a sandwich when we are hungry, a cold drink when we are thirsty, and more money when … whenever. We measured how much dopamine was produced by our participants’ brains. We did this with a technique called PET, short for Positron Emission Tomography.

Ok, let's be honest here: our participants were anticipating 15 dollar cents at a time instead of thousands of dollars. Nevertheless, we found clear effects of this promised bonus on performance. Importantly, these bonus effects were not consistent across the group. About half of our participants showed better focused attention when promised a high bonus, but the other half actually performed more poorly! Interestingly, these individual differences corresponded with differences in the amount of brain dopamine. Specifically, individuals with lots of dopamine performed more poorly on the computer task when promised 15 cents compared with 1 cent! How can this be? From previous research we know that both too little and too much dopamine can be bad for our brain. When we are told that we can earn more money, we want that money and our dopamine levels rise. If an individual’s brain is already high in dopamine at rest, then the promise of a bonus will lead to a level of dopamine that is too high, to an overdosis if you will.

So, should companies promise their employees high bonuses? It seems this is quite risky business. It is clearly dependent on someone’s dopamine level whether that person will perform better or worse.

This blog was written by Esther Aarts, senior researcher of the lab and accompanies this paper:
Aarts, E, Wallace, DL, Dang, LC, Jagust, W, Cools, R, D'Esposito, M (2014). Dopamine and the cognitive downside of a promised bonus. Psychological Science. 

There is a Dutch and English press release from the Radboud University Nijmegen about this study. And here you find the release from the international press release website Alpha Galileo.

Watch also the TED talk by Dan Pink on this topic.