We test the impact of introducing performance appraisals on civic values and moral behavior in a field experiment with 2,409 teachers from public primary schools in Indonesia. Employing three treatment arms that vary the appraisal scheme and its financial consequences, we find supporting evidence for the crowding out of moral behavior. Performance appraisals reduce teachers’ altruism towards the workplace and increase dishonest behavior. Although the effects exist across all treatment arms, they are particularly pronounced when performance appraisals are linked to explicit financial sanctions. Our study sheds light on underlying mechanisms and real-world consequences. In particular, we show that teacher effort did not change due to the monthly performance evaluations, while teachers appear to retaliate against its evaluators (community members).