BC Advantage - 2024 Issue 5

The Cobra Effect: A Study in Laws of Unintended Consequences

Every decision or action we make carries unintended consequences. The “cobra effect” is a term coined for a solution that makes a current problem worse based on incentives, rewards, and/or punishments—exposing chinks in the planning. Perverse incentives are nearly natural by-products, motivating unscrupulous individuals to game the system to make easy money or cut corners in regulations.   The “Cobra”   In the late 1800s to early 1900s, when India was ruled by the British government, there was a problem with venomous cobras invading major cities. The British government decided to take action, and they offered...

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