The Cobra Effect is a phenomenon where an intended solution to a problem actually makes the problem worse. It is named after a historical incident in colonial India, where the British government offered a bounty for dead cobras in an attempt to reduce the cobra population. However, instead of decreasing the cobra population, this policy led to an increase in cobra breeding, as people started to breed cobras in order to collect the bounty.
The Cobra Effect is a common occurrence in public policy and management, where well-intentioned solutions backfire because they fail to take into account the incentives and motivations of the people affected by the policy. One example of the cobra effect is when governments offer subsidies for certain products, it can lead to overproduction of those products, which can then lead to an oversupply and prices drop.
Another example of the Cobra effect can be seen in the context of performance metrics. When a manager sets a target for their team, and the team focuses on achieving that target, they may neglect other important aspects of their job, or even engage in unethical behavior to meet the target.
- Perverse incentive from Wikipedia