Abstract: Cognitive flexibility has been shown to be heavily influenced by sequential changes in the amount of reward available. When available reward remains constant, participants favor stability and are more likely to repeat tasks; when available reward changes, they favor flexibility and are more likely to switch tasks. However, past work in this area hasn’t considered what happens when the available reward is not received, e.g., when responses are too slow to receive performance-contingent rewards. If participants are mainly influenced by dynamics in available rewards (rather than outcomes), such outcomes may not affect their behavior. Alternatively, the failure to receive an anticipated reward may be treated as an aversive signal, biasing participants to shift away from the previous task. In the current study, we used EEG and pupillometry to examine the neural response during reward cues and feedback to dissociate these two possibilities. Behaviorally, we found that participants switch more after failing to receive a high reward due to a slow response than after receiving a high reward. Neurally, we found increased pupil dilation and theta power in response to slow response feedback compared to low reward feedback. Taken together, these results suggest that receiving feedback that the response was too slow increases arousal and shifts behavior to favor flexibility.