No. 350 · Fixing problems · Human Nature and Judgement
Cobra Effect
A reward for fixing a problem can end up paying people to create more of it.
In the Almanac
“Hoy No Circula”, 1989 · “Credits for HFC-23”, 2005–2013
Both stories in full, three ways to use it and where it misleads.
Get the AlmanacListen · Watch
Questions
What is Cobra Effect?
The Cobra Effect happens when a solution rewards the wrong behavior. Mexico City's one-day driving ban led families to buy extra, dirtier cars, and carbon credits for destroying a waste gas risked rewarding factories for making more of it.
How do you use Cobra Effect?
Before setting any rule, bonus or target, imagine how a clever person would game it. Measure the real goal, not a convenient stand-in, start small, and adjust quickly when people respond in ways you didn't expect.
When does Cobra Effect matter?
Cobra Effect is one of the 40 mental models for fixing problems, the situations where you ask: Why does this keep going wrong, and how do I fix it for good? Within that, it belongs to “When fixes backfire”, alongside Blowback, Collateral Damage and Hydra Effect.
What is an example of Cobra Effect?
Two stories show it at work: Hoy No Circula (1989) and Credits for HFC-23 (2005–2013). Both are told in full in The Mental Models Daily Almanac, which has two stories for each of its 365 models.
Which mental models are related to Cobra Effect?
Perverse Incentives, Moral Hazard and Proxy. Cobra Effect itself comes from human nature and judgement.