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Many high-performance engines are designed to operate with a high maximum compression and thus demand high-octane premium gasoline. A common misconception is that power output or fuel mileage can be improved by burning higher octane fuel than a particular engine was designed for. The power output of an engine depends in part on the energy density of its fuel, but similar fuels with different octane ratings have similar density. Since switching to a higher octane fuel does not add any more hydrocarbon content or oxygen, the engine cannot produce more power.
However, burning fuel with a lower octane rating than required by the engine often reduces power output and efficiency one way or another. If the engine begins to detonate (knock), that reduces power and efficiency for the reasons stated above. Many modern car engines feature a knock sensor – a small piezoelectric microphone which detects knock and then sends a signal to the engine control unit to retard the ignition timing. Retarding the ignition timing reduces the tendency to detonate, but also reduces power output and fuel efficiency.
THE WIKI HAS SPOKEN. http://en.wikipedia.org/wiki/Octane_rating