The Paradox of Plenty: Investigating 'Incentive Anxiety' as a Mediator Between High-Powered Rewards and Performance Decline

We all assume that bigger incentives lead to better performance. Most of the studies here, like Lestari & Yusuf (2025) and Chen et al. (2023), confirm this positive link. But then you find these fascinating exceptions. Acharya and Oli (2024) explicitly challenge the assumption that higher pay leads to better performance, suggesting that high pay expectations might actually create performance pressure and reduce output. This is a huge deviation from the norm!

My idea is to formally define and investigate this phenomenon, which I'll call "Incentive Anxiety." This would be a research project that explores the dark side of high-powered incentives. It would test the hypothesis that for certain individuals, on certain tasks (especially complex, creative, or high-stakes ones), the psychological pressure of a large, contingent reward can be so debilitating that it leads to choking or risk-averse behavior, ultimately harming performance. This would directly explain the conflicting findings we see, like why Alberd (2023) found no significant effect of incentives while others did—it might depend on the pre-existing anxiety levels or risk tolerance of the employees. This research would develop a scale to measure Incentive Anxiety and test its mediating role between incentive size and performance outcomes. It's novel because it introduces a negative psychological mediator into the classic incentive-performance equation, providing a more nuanced and realistic theory of when and why incentives backfire.

References:

1. The Impact Of Finansial and Non-Finansial Incentives On Employee Performance : Case Study Of Perbankan Company. Andyni Dewi Lestari, Budi Permana Yusuf (2025). EKOMBIS REVIEW: Jurnal Ilmiah Ekonomi dan Bisnis.
2. The Influence of Incentives, Motivation and Work Discipline on Employee Performance at Credit Union Filosofi Petani Pancur Kasih Pontianak. Alberd Alberd (2023). Jurnal Mandiri.
3. Role of Financial and Non-financial Incentives on Employee’s Performance: A Study on the Banking and Insurance Sectors of Nepal. Anjana Acharya, Sudan Kumar Oli (2024). Interdisciplinary Journal of Innovation in Nepalese Academia.
4. An empirical study of the relationship between management equity incentives and enterprise performance in the manufacturing industry. Meiqing Chen, Liezhi Shen, Yunxi Ling (2023). Academic Journal of Business & Management.