The following was lifted from Angie on the AlwaysUnschooled mailing list in regards to "potty training." I believe it is one of the most apt descriptions I've ever seen of why rewards don't work the way we'd expect them to. (For those without a handy dictionary, "intrinsic" means coming from within and "extrinsic" means coming from without.)
Distinguishing between "intrinsic motivation" and "extrinsic motivation" makes it easier to see how rewards infringe on autonomy. If a child were inner-directed (autonomously interested) in performing a certain task (e.g., eliminating in the toilet), then a reward wouldn't be necessary. The *task* (or intrinsic value in it) would be rewarding in and of itself and the fuel behind the behavior.
However, a kid's very focus on the expectation of an external reward (candy, praise, gold stars, etc.) actually *distracts* from the inherent value of the activity in question, and in many circumstances causes the kid to DE-value the activity even more. This is because the task comes to be seen as a "means to an end" rather than an "end" in itself. The activity becomes a "barrier" that stands in between the child and the reward, thus the child is 'trained' to regard that activity as an unpleasent event, only worth doing if there is an "external" reward (candy, praise, etc.) promised for doing it.
If this concept is appealing to you or you'd like to hear more about the idea (explained in detail with a wealth of empirical data from reputable social psychology journals), please get yourself a copy of "Punished By Rewards" by Alfie Kohn.