Cobra Effect
Cobra Effect: "A poorly designed incentive worsens the problem it was meant to solve". The deepest danger of incentive design.
Origin
In 19th-century British colonial Delhi, the government placed a bounty on cobra carcasses to reduce the population. It worked initially — until people began farming cobras for the bounty. When the bounty was scrapped, the bred cobras were released into the wild, multiplying the original problem. German economist Horst Siebert formalized this as the "Cobra Effect" in his 2001 book.
Meaning
The deepest danger of incentive design. When people find loopholes, they optimize away from the original goal. Vietnam's rat tail bounty (rat farming), US healthcare reimbursement (overtreatment), school test score incentives (cheating) — all variations of the same pattern.
Lesson — Meeting Eastern Classics
Analects: "Excess is as bad as deficiency." Confucius taught balance — rewards toward one extreme produce behavior at the other. The cobra effect is 過 (excess) made measurable.
"反" depicts a hand (又) turning something — opposite, reverse. Zhuangzi: "Turning back is the movement of the Way." The cobra effect is 反 made cold-blooded — intention and outcome flip.
