Higher incentives → less performance…
… at least for tasks that do not require physical performance, rather creative solutions. Isn't that interesting, what's more, unexpected; and even beautiful to boot? It seems to be a really well established finding in social / cognitive science for several decades (e.g. by people like Dan Ariely). A beautiful animated movie (linked below) makes that point, as does Dan Pink in this TED talk http://www.ted.com/talks/dan_pink_on_motivation.html.
So what really motivates for more challenging tasks are the following 3 factors that lead to better performance & deeper personal satisfaction: autonomy, mastery, and purpose. Or, in other words: self-directed activity, improving oneself, bestowing meaning. View the beautifully animated movie below or Dan Pink's TED talk for deeper background.
And yes, I can relate each of the three: if I were not as autonomous in my department, I'd be a much less productive scientist; I strive –for instance– (light years off target) to improving in music, and I am searching for endurign meaning