There research that it reduces people's intrinsic motivation.

It would be useful to look into the research that whether it is about formal grading vs. informally judging each other or grading vs. a non-judgemental, non-competitive environment. My hunch is they studied the second and I am talking about the first, namely that informal judgements, tests, status competitions are the worst because you can never really be sure about your status so you must put extra effort in competing just ensure it.