Cobra Quote by Anonymous
““the cobra effect.” As the story goes, a British overlord in colonial India thought there were far too many cobras in Delhi. So he offered a cash bounty for every cobra skin. The incentive worked well—so well, in fact, that it gave rise to a new industry: cobra farming. Indians began to breed, raise, and slaughter the snakes to take advantage of the bounty. Eventually the bounty was rescinded—whereupon the cobra farmers did the logical thing and set their snakes free,””
About This Quote
Source Historical anecdote: British colonial India bounty policy, 19th century
Attempts to reduce a problem by rewarding its destruction can create perverse incentives that worsen the issue
In simple terms: Rewarding removal can backfire
Key Takeaway
Consider unintended consequences before designing incentives
Themes
policy
economics
behavioral economics
Mood
cautious
reflective
Type
cautionary
historical
When to use this quote
- wildlife management
- environmental regulation
- law enforcement
- business strategy
Key Concepts
perverse incentives
moral hazard
unintended consequences
Questions to Reflect On
- What incentives could lead to opposite outcomes?
- How can we anticipate perverse incentives?
A Different Perspective
If the bounty were removed earlier, the industry might not have formed
