Dan Pink quotes in his book Drive: The Surprising Truth About What Motivates Us a number studies that looked at how tangible rewards influenced the motivation to solve and engage with tasks. This is a comprehensive collection of them:
In 1949, psychology professor Harry F. Harlow from the University of Wisconsin experimented with eight rhesus monkeys on learning. They gave the monkeys a simple puzzle device that required the monkeys to pull out a pin, undo the hook, and lift the hinged cover. For monkeys a pretty advanced task. The monkeys became quickly interested in the topic, played determinedly with the device, and figured out how the mechanism worked. During these activities the monkeys displayed signs of enjoyment.
The monkeys had done all this without having gotten any rewards, no food, affection or otherwise for what they were doing. According to the theories back then, offering rewards would certainly lead to better results.
When Harlow gave the monkeys raisins for solving the puzzles, the monkeys actually made more errors, and solved the puzzles less frequently.
In 1969, psychology graduate student Edward Deci at Carnegie Mellon University used the popular Soma puzzle cube as prop for study participants. He divided the male and female participants into two groups. One group A, and a control group B. Over three consecutive days, the participants received at the beginning of every one-hour session three drawings of configurations that they had to create out of the puzzle pieces. The drawings where the same for both groups at the given day, but every day there were thee drawings that differed from the day before.
On Day 1, both groups didn’t get a reward. On Day 2, participants of Group A were promised $1 for every configuration they successfully reproduced, but Group B didn’t get and wasn’t promised any rewards. On Day 3 none of the groups was promised and given any rewards.
Every day, once the participants had completed the first 2 configurations, Deci explained to the participants that he needed to enter the data in the adjourning computer room, and left them with a fourth drawing. This of course was a setup, as Deci monitored the participants in the adjourning room through a one-way mirror for exactly 8 minutes.
On the first day, participants of both groups continued the puzzles during the secretly watched period , and worked on them for an average of three and a half and four minutes. On the second day, “unpaid” Group B behaved like the day before, while participants of the Group A seemed really interested in the task. This group now spent on average five minutes on the puzzle. But on the third day, with no reward promised to both groups, Group A spent significantly less time on the puzzle: three minutes. Group B’s time was slightly higher than the two prior days.
Psychologists Mark Lepper, David Greene, and Robert Nisbett watched preschoolers for several days and choose the kids who liked to draw during their “free play” time as study participants. With other words: they selected children who clearly enjoyed drawing. The divided then the children into three groups. The first group was the “expected-award” group, who would get a “Good Player” certificate if they wanted to draw. The second group was the “unexpected-award” group, which weren’t told that they would get a reward. The third group was the “no-award” group, no awards were promised, no awards were given. The two first groups, would get the certificated handed out at the end of the drawing session, where the firsr group would expect it because they were told, while the second group would get the certificates unexpectedly. That reward-experiment was done one time on day only.
Two weeks later the researchers visited the classroom of preschoolers again, an watched the free play time. When the teachers handed out paper and markers, the children from the previous “unexpected-award” and “non-award” groups, were drawing with the same energy and interest as they had two weeks before. But the children from the former “expect-award” group showed much less interest and spent much less time drawing.
Economists Dan Ariely, Uri Gneezy, George Lowenstein, and Nina Mazar from MIT, Carnegie Mellon, and the University of Chicago recruited eighty-seven participants in Madurai, India and asked to them to perform several exercises – including tossing tennis balls at targets, unscrambling anagrams, recalling a string of digits – that required motor skills, creativity, and concentration. The participants were separated into three groups. The first group could earn a reward of 4 rupees (equal one day’s pay in Madurai) for reaching the goals, the second group 40 rupees (10 days’ pay), the third group 400 rupees (nearly five months’ pay).
The result was that the people offered the small- and medium-sized bonus did perform the same, while the group with the largest bonus performed worst. According to the researchers, they lagged in nearly every measure behind the two other groups. The researchers wrote,“In eight of the nine tasks we examined across the three experiments, higher incentives led to worse performance.“
Psychologist Sam Glucksberg from Princeton University tested in the early 1960, how rewards influence the problem-solving prowess of study participants. The task given was the “candle problem”, developed by psychologist Karl Duncker in the 1930s, which requires participants to overcome what’s called “functional fixedness.“ The task is to attach a candle to the wall so that it doesn’t drip wax on the table. As tool participants receive a candle, a box of matches, and a box of tacks. Figure 4 demonstrates of what has to be done. Typically, test subjects would try to tack the candle to the wall, until they understand that the box in which the tacks are can be used as well to reach the desired outcome.
Glucksberg now divided his participants in two groups, timing each groups duration to come to the solution. The second group however, was offered incentives. If the participant’s time was among the fastest 25% of all the people tested, the participant would receive a reward of $5. If the participant’s time was the fastest, the reward would be $20. Adjusted for inflation this is a pretty nice sum.
The result was that the incentivized groups’ time took nearly three and a half minute longer.
Three studies show the effect of extrinsically driven motivation for two professions: artists and scientists. In the first study, Harvard Business School professor Teresa Amabile recruited twenty-three professional artists, and asked them to randomly select from their work ten commissioned and ten non-commissioned works. These works were then handed to a panel of artists and curators, who didn’t know anything about the study nor the background of the works, and were asked to rate the pieces on creativity and technical skill. The panel rated the commissioned works as significantly less creative than the non-commissioned works, though the technical quality was rated as equal.
The second study conducted in the early 1960s amongst sophomores and junior at the School of the Art Institute of Chicago surveyed them about their attitude toward work and whether their motivations were more intrinsically or extrinsically focused. A follow-up study in the early 1980s compared the success of these students with their original dominant motivation. The result for men was that “The less evidence of extrinsic motivation during art school, the more success in professional art both several years after graduation and nearly twenty years later. [..] Those artists who pursued their painting and sculpture more for the pleasure of the activity itself than for extrinsic rewards have produced art that has been socially recognized as superior. [..] It is those who are least motivated to pursue extrinsic rewards who eventually receive them.“
The third study conducted in 2009 by Pierre Azoulay from the MIT, Joshus S. Graff Zivin from the University of California in San Diego, and Gustavo Manso from the MIT looked at the creative output and the impact rate of similarly accomplished scientists, who had received grants from either the US National Institute of Health (NIH) or the Howard Hughes Medical Institute (HHMI). The first funding process from the NIH emphasizes “short review cycles, pre-defined deliverables, and renewal policies unforgiving of failure,“ while latter one from the HHMI “tolerates early failure, rewards long-term success, and gives its appointees great freedom to experiment.“ The rate of high-impact from research funded by the HHMI was much higher.
In 2008, Swedish economists Carl Mellström and Magnus Johannesson decided to test the bold theory from British sociologist Richard Titmuss, who had stated in 1970 that paying for blood donation was not only immoral, it was also ineffective. He speculated that this would reduce the blood supply. Mellström and Johannesson built on that and conducted a field experiment at the regional blood center in Gothenburg. From the 153 women interested in donating blood, they divided them into three groups. The first group donated blood without being offered a reward, the second group was offered 50 Swedish Kronor ($7), and the third group was also offered a 50 Kronor reward with the option to donate the reward to a children’s cancer charity. 52% of the first “non-award” group went ahead and donated blood, 30% of the “expect-reward“ group women donated blood, and 53% of the third group with the option to donate the reward donated blood. However, for men the offered rewards did not have a statistically significant effect.
The interesting thing is that not all rewards seem to be bad. The third group’s option to immediately donate the money negated the effect that the second group experienced. Similarly, a reward that removes an obstacle to altruism – like the Italian government giving blood donors aid time off work – increased blood donations.
Economists Uri Gezner and Aldo Rustichini studied over a period of twenty weeks in Haifa, Israel in 2008 a child care facility that opened from 7am to 4pm during week days (which is from Sunday to Thursday in Israel). Parents were supposed to pick their children up at closing time, otherwise the teachers would have to stay late. The economists recorded the number of parents who arrived late each week. After the fifth week the researchers changed the procedure and introduced a penalty that had to be paid by late coming parents. For every time a child was picked up after 4:10pm, a fine of approximately $3 per child had to be paid.
The result was that the number of parents picking their children up late doubled after the fine was introduced. And it stayed at this rate, even after the fine was removed and the late-pickup-policy reversed to the original one.
In 2009, scholars at the London School of Economics analyzed fifty-one studies of corporate pay-for-performance plans. These economists’ conclusion: “We find that financial incentives may indeed reduce intrinsic motivation and diminish ethical or other reasons for complying with workplace social norms such as fairness. As a consequence, the provision of incentives can result in a negative impact on overall performance “
A meta-analysis of 128 studies examined the effects of extrinsic rewards on intrinsic motivation and came to the conclusion that engagement-contingent, completion-contingent, and performance-contingent rewards significantly undermined free-choice intrinsic motivation, as did all rewards, all tangible rewards, and all expected rewards.
When money is used as an external reward for some activity, the subjects lose intrinsic interest for the activity. Rewards can deliver a short-term boost – just as a jolt of caffeine can keep you cranking for a few more hours. But the effect wears off – and worse, can reduce a person’s long-term motivation to continue the project.
As Dan Pink concludes in Drive, carrots and sticks have what he calls “The Seven Deadly Flaws”:
1. They can extinguish intrinsic motivation.
2. They can diminish performance.
3. The can crush creativity.
4. They can crowd out good behavior.
5. They can encourage cheating, shortcuts, and unethical behavior.
6. The can become addictive.
7. They can foster short-term thinking.
 Mark Lepper David Greeene, Robert Nisbett, “Undermining Children’s Intrinsic Interest with Extrinsic Rewards: A Test of the ‘Overjustfication’ Hypothesis,” Journal of Personality and Social Psychology 28 (1973): 129-37
 Dan Ariely, Uri Gneezy, George Lowenstein, Nina Mazar, “Large Stakes and Big Mistakes,“ Federal Reserve Bank of Boston Working Paper No. 05-11, July 23, 2005
 Sam Glucksberg, “The Influence of Strength of Drive on Functional Fixedness and Perceptual Recognition,” Journal of Experimental Psychology 63 (1962): 36-41
 Teresa M. Amabile, Elise Philips, Mary Anne Collins, “Person and Environment in Talent Development: The Case of Creativity,“ in Talent Development: Proceedings from the 1993 Henry B. and Jocelyn Wallace National Research Symposium on Talent Development (Dayton: Ohio Psychology Press, 1993), 273-74
 Jean Kathryn Carney, “Intrinsic Motivation and Artistic Success“ (unpublished dissertation, 1986, University of Chicago)
 Pierre Azoulay, Joshua S. Graff Zivin, Gustavo Manso, “Incentives and Creativity: Evidence from the Academic Life Sciences,” Dec. 30th,2011 http://pazoulay.scripts.mit.edu/docs/hhmi.pdf
 Carl Mellström, Magnus Johannesson, “Crowding Out in Blood Donation: Was Titmuss Right?” Journal of the European Economic Association 6, no. 4 (June 2008): 845-63
 Nicola Lacetera, Mario Macis, “Motivating Altruism: A Field Study,” Institute for the Study of Labor Discussion Paper No. 3770, October 28, 2008
 Uri Gezner, Aldo Rustichini, “A Fine is a Price,” Journal of Legal Studies 29 (January 2000).
 “LSE: When Performance-Related Pay Backfires,“ Financial, June 25, 2009.
 Edward L. Deci, Richard M. Ryan, Richard Koestner, “A meta-Analytic Review of Experiments Examining the Effects of Extrinsic Rewards in Intrinsic Motivation,” Psychological Bulletin 125, no. 6 (1999): 659.
 Edward L. Deci, “Effects of Externally Mediated Rewards on Intrinsic Motivation,“ Journal of Personality and Social Psychology 18 (1971): 114.