- A substitution effect that the intrinsic motivation fades and is replaced by the less effective and problematic extrinsic motivation of rewards
- Studies demonstrate that extrinsic rewards can demotivate
- Drawing – Kids who initially drew due to intrinsic motivation (love doing it) were given tangible rewards. Once the rewards were removed, they were no longer as motivated to draw and the quality of drawings dropped.
- Day care pickup – Parents initially avoided being late to pickup their kids due to social pressure, desire not to inconvenience daycare workers. Implementation of a fine (punishment) resulted in even later pickups as parents choose to do something that they value more than the fines.
- Blood donation – People were initially encouraged to donate blood due to civic duty to help others but when payment is made for donations, the intrinsic motivation gets crowded out.
- Teacher salaries – Paying teachers based on results of kids tend to crowd out the intrinsic reasons for teaching well
- Generally focused on “interesting” tasks
- Reward types matter
- Tangible – greatest risk of substituting intrinsic motivation
- Performance-contingent – reward can be demotivating when instead of some accomplishment in performance, the reward is an extrinsic factor