Answer
Budgets affect behavior: they can motivate through clear targets or demotivate if seen as unfair or unattainable; they can encourage slack, gaming, or short-termism (e.g., cutting maintenance to hit numbers); and participation affects ownership. Well-designed budgets balance challenge and achievability, involve managers appropriately, and avoid tying rewards too rigidly to a single number.
Real-world example Managers defer needed spending to hit the annual budget, harming the business long term—a dysfunctional behavior.