Avoid High-Stakes Choking by Calibrating Incentives

The psychology lab was buzzing. Five groups of graduate students sat hunched over six peculiar tasks—a memory game, a puzzle, a maze, and more—each offering different bonuses. Some would earn the equivalent of a day’s pay, others two weeks, and the last group nearly half a year’s worth. The researchers hypothesized that bigger bonuses should spark better performance, just as obvious economics predicts.

But the data told a surprising tale. The highest bonuses didn’t produce star performers—in fact, they flunked compared to their more moderately rewarded peers. When the stakes rose astronomically, the participants choked under pressure, their minds jammed by the very thought of big rewards. Just like rats who froze before painful shocks in the classic Yerkes-Dodson experiment, humans can’t always handle sky-high incentives when complex thought is required.

This phenomenon, known as the inverse-U relationship between motivation and performance, reminds us that rewards can backfire when they push us into stress overload. Low to moderate stakes sharpen focus and drive our best efforts, but when we obsessively fixate on massive payoffs, our brains get hijacked by anxiety. Simple mechanical tasks—counting pennies, jogging laps—thrive under higher incentives, but creative, strategic, or intellectual tasks buckle when overmotivated.

First, gauge your upcoming project’s mental demands. Then, set rewards that excite but don’t scare—think achievable bonuses or milestones. Break up big incentives into smaller, regular payments. Check in often to ensure stress levels stay supportive, not smothering. Soon you’ll find the sweet spot where motivation boosts rather than breaks performance.