Daniel Pink has a video over at TED talks about the reverse nature of incentives.
It turns out that incentives such as money only work to increase productivity for mechanical actions. For tasks requiring even rudimentary cognition, incentives act to decrease productivity.
And it's proportional. Higher incentives cause more reduced productivity.
Here's the video.
Think about it. In the United States we have the greatest income gap between the highest earners and the lowest earners we have ever had. CEOs, stock brokers, are all incentivized by huge bonuses.
That may not even work.