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What’s the Value of a Big Bonus?

Dan Ariely discusses some of his research on the effectiveness of paying for performance:

We found that as long as the task involved only mechanical skill, bonuses worked as would be expected: the higher the pay, the better the performance. But when we included a task that required even rudimentary cognitive skill, the outcome was the same as in the India study: the offer of a higher bonus led to poorer performance.

Dan Pink drew similar conclusions in his TED talk from last year: