Financial incentives for service providers are increasingly used in developing countries as atool to maximize the effort and output of public providers. Using a field experiment in theDRC, we evaluate the impact of a fee-for-service mechanism aimed to increase health serviceutilization. We find that, relative to fixed payments, the fee-for-service mechanism slightlydecreased service utilization. We show that these detrimental effects of incentives do notresult from a diminution in workers' efforts, fraud, or switching away from non-incentivizedactions. But workers’ intrinsic motivation decreased and their efforts were evidentlymisplaced, showing that incentivized workers are not always more productive because theymay not understand how to perform.
