Samuel Bowles has written a very nice article on the March issue of HBR, When Economic Incentives Backfire.
From the article:
Organizations and societies rely on fines and rewards to harness people’s self-interest in the service of the common good. The threat of a ticket keeps drivers in line, and the promise of a bonus inspires high performance. But incentives can also backfire, diminishing the very behavior they’re meant to encourage.
Samuel Bowles (his home page is here) is Research Professor and Director of the Behavioral Sciences Program, Santa Fe Institute and Professor of Economics, University of Siena.
He has written several books, among them Microeconomics: Behavior, Institutions, and Evolution