The overjustification effect is the finding that providing external rewards for an activity that was previously intrinsically motivating reduces intrinsic motivation — sometimes permanently.

The Classic Experiment

Lepper, Greene, and Nisbett (1973) identified preschool children who spontaneously enjoyed drawing. One group was promised and given a "good player" certificate for drawing. A second group received a surprise reward. A third received nothing.

Two weeks later, with no reward offered, the children who had received the expected reward spent significantly less time drawing than the other two groups. The intrinsic motivation had been displaced by external justification.

Why It Happens

When you're paid for something you enjoyed, you reattribute your motivation: "I must be doing this for the money." Once the money stops, so does the activity — the intrinsic enjoyment has been overwritten.

Profound Implications

• Paying children for reading can destroy reading motivation
• Bonuses for creative work can undermine creativity
• Grading systems may damage lifelong learning motivation
• The wrong compensation structure can turn passion into just a job

Exception

Unexpected rewards and performance-contingent feedback preserve intrinsic motivation better than expected, task-contingent rewards.

Reference:

Wikipedia: Overjustification Effect

https://en.wikipedia.org/wiki/Overjustification_effect