When everything is on the line, people often blow it. Just look at game shows or sporting events, where many contestants or players crumble under pressure.
This is especially true when money is involved, say researchers from the California Institute of Technology. Increasing the payout of a game only improves performance up to a certain point. Beyond that, fear of losing the reward—not the game itself—causes people to choke.
In a study published in the journal Neuron, researchers measured brain activity while participants tried to hit a target with a virtual object. Players were offered cash rewards before each trial, with the payout at the end of all trials based on their performance on a single randomly selected round.
Performance improved as the rewards increased, but only at the low end. At higher dollar amounts, performance dropped as the potential payout increased.
A functional MRI scan showed that offering a reward before each trial activated a part of the brain involved in incentives. This activity grew with the reward. Once people starting doing the task, however, brain activity dropped with larger rewards.
Researchers also found that lower activity in this part of the brain was linked to worse performance in the game.
Larger rewards motivated participants to play, but decreased their performance by making them worry about losing their future winnings. In addition, people who were more afraid of losing—also known as loss-averse—were more likely to choke at lower dollar amounts.
While this test was done with a single task in a lab, the results may apply to other high-stakes areas like business and politics.