Universal Principles of Design, Updated and Expanded Third Edition

138 Perverse Incentive

An incentive that unintentionally worsens the problem it seeks to solve.

An incentive is anything that motivates or encourages someone to behave in a particular way. A perverse incentive, then, is an incentive gone awry. It unintentionally motivates or encourages someone to behave in a contrary way, or in a way that results in unintended negative consequences.1

Perverse incentives manifest in three ways:

1. Boomerang effects — When an incentive is offered to modify behavior but the opposite behavior results. For example, an Israeli daycare wanted to reduce the number of parents picking their children up late, so they introduced a small fine. The result? Late pickups doubled. Before the fine, parents would try to pick up ...