The city of Chicago had a big problem. Street trash was everywhere. So the city came up with a brilliant plan: start paying everyday people to collect street trash. But crafty citizens started gathering trash from one neighborhood, then quietly depositing it in another. They had inadvertently incentivized people to drive around the city, moving trash from one place to another.
In the 19th-century, the government in Ireland started paying orphanages a stipend for each abandoned child. What they didn’t foresee was that orphanages would begin paying families to turn over their offspring, thus providing an incentive for parents to forsake their children.
How Can you Avoid the Cobra Effect?
1) Seek out ambiguous language
Inexact terms often lead to unintended consequences.
2) Think like a criminal
Put significant time and effort into figuring out the devious ways you can break your own system.
3) Test, test, test
Run your program or study on a small sample before putting your big project in the field.