OOPS! Many policies and incentives plans seem like good ideas on their face, but can have unintended consequences. Here's one lesson from hissssssssstory.
When the British colonized India they sought to reduce the number of deadly cobras so they paid a bounty for each dead snake. Almost immediately, enterprising villagers began breeding them, producing a profitable bumper crop of the menacing creatures.
When the Brits realized what was happening, they stopped paying the bounty. This rendered the villager's snakes worthless, so they let them all go. The net effect of the program designed to decrease cobras was to INCREASE the total number of deadly snakes slithering about the colony. It's still called "The Cobra Effect."
I spotted this sign at Publix grocery store. The store intends to discourage after-hours crime, but may have unwhittingly encouraged daylight robberies instead.
Mistakes like these are easy to make because, when designing policies or signs, we use our conscious System 2 thinking process. But, when responding to policies and signs, people most often use their System 1 process. The logical, System 2 process that hatches the plan has a difficult time predicting how other people's irrational System 1 process will respond.
The way to avoid having your policy, sign or incentives plan backfire is to:
1. Understand the realities of human behavior (Behavioral Economics). This helps your conscious System 2 thought process better understand and predict how people's System 1 process will respond.
2. Conduct experiments, where possible, to measure people's actual response. Where that's not possible, at least spend some time thinking about your policy--role playing or imagining how people will respond.
Spread the fire. GS