The way I see it, the essence of evil is self interest above all. I see an evil character as one driven by greed, who lusts for power, one who'll take what they want even at the expense of others. When faced with a decision or a quest, an evil character doesn't ask "How can I be as big of a dick as possible?", they ask "How will this benefit me?".
So in other words I agree - there should be more incentive to be evil. In fact, I'd go further: there should be more incentive to be evil than good. Playing evil should be easy mode, they should get more loot, better gear, and positions of power. You don't choose to be evil for evil's sake; You are tempted by it, because evil means you get to live deliciously. You can have anything you want... all it costs is your soul.
Being good, on the other hand, is more often than not a thankless job. Good characters are selfless and self-sacrificing. Sometimes this means putting themselves in harm's way to protect the weak. Sometimes this means giving up what they want for the benefit of others. I think this is needed in order for the heroism to feel real. After all, if there is no downside to altruism, then why would I ever act any other way? Certainly not just for evil's sake, I don't like being unlikeable.
Evil or Good shouldn't be a choice you make at the beginning of a playthrough. It should be the angel and devil on your shoulder, always there, nagging you in every moral choice to do what's right, or take what you want.
Very well said. Just to build on this further.
Perhaps at the very end there is an event where all the people you helped can help you. If you were a selfish evil character who only acted on their own behalf would stand alone. Your evil companions would probably abandon you... why should they risk themselves for your benefit?
But if you were good then you made friends. Friends that will stand by you. And face the final boss united.
I am not saying this should happen but just brainstorming an idea that all the player's decisions culminating in one final event where you know the real consequences of your action.