The Cobra Effect: Perverse Incentives

The Cobra Farm

When the British offered money for dead cobras, entrepreneurial locals started breeding cobras to kill them for the bounty. When the government realized this and stopped the bounty, the breeders released the now-worthless snakes, tripling the original population. This is the Cobra Effect: When an attempted solution makes the problem worse due to unintended incentives.

Real-World Examples

• Programming: Measuring efficiency by “lines of code” leads to bloated code.
• Paleontology: Paying peasants for dinosaur bone “fragments” led them to smash large bones into smaller pieces.

Second-Order Thinking

Before you implement a rule or reward, ask: “How will people game this system?” Humans are masters at finding loopholes. Never underestimate the power of a bad incentive.