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

Chib, Vikram S. and De Martino, Benedetto and Shimojo, Shinsuke and O'Doherty, John P. (2012) Neural Mechanisms Underlying Paradoxical Performance for Monetary Incentives Are Driven by Loss Aversion. Neuron, 74 (3). pp. 582-594. ISSN 0896-6273. PMCID PMC3437564.

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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.

Item Type:Article
Related URLs:
URLURL TypeDescription CentralArticle
Chib, Vikram S.0000-0001-8810-5699
O'Doherty, John P.0000-0003-0016-3531
Additional Information:© 2012 Elsevier Inc. Accepted 27 February 2012; Available online 9 May 2012; Published May 9, 2012. We thank Colin Camerer and Cary Frydman for insightful comments and Ralph Lee for his assistance. This work was funded by grant NSF 1062703 from the National Science Foundation to J.P.O.D., funds from the Gordon and Betty Moore foundation to J.P.O.D., grants from the JST.ERATO to S.S., and by the Caltech/Tamagawa gCOE to S.S. and J.P.O.D.
Funding AgencyGrant Number
Gordon and Betty Moore FoundationUNSPECIFIED
Japan Science and Technology (JST) Exploratory Research for Advanced Technology (ERATO)UNSPECIFIED
Caltech/Tamagawa Global Center of Excellence (gCOE)UNSPECIFIED
Issue or Number:3
PubMed Central ID:PMC3437564
Record Number:CaltechAUTHORS:20120614-111416562
Persistent URL:
Official Citation:Vikram S. Chib, Benedetto De Martino, Shinsuke Shimojo, John P. O'Doherty, Neural Mechanisms Underlying Paradoxical Performance for Monetary Incentives Are Driven by Loss Aversion, Neuron, Volume 74, Issue 3, 10 May 2012, Pages 582-594, ISSN 0896-6273, 10.1016/j.neuron.2012.02.038. (
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:31903
Deposited By: Aucoeur Ngo
Deposited On:18 Jun 2012 19:59
Last Modified:25 Oct 2019 18:00

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