Think Like a Freak

This term is sometimes applied to the unintended effects of the incentives used in policy. It comes from an example in colonial India, when the British government there instituted a policy in Delhi intended to cull the cobra population. A bounty was paid for each skin of a dead cobra turned in. It worked well until the cash incentive created a sideline business: breeding cobras. Because it was an easy source of cash, people simply bred and raised cobras so they could then be killed for their skins. When the program eventually ended, the cobras—no longer needed—were set free, negating the effects of the program. The authors use this as an example of how incentives can backfire.

This is the same as sunk-cost fallacy. The name comes from the Concorde airplane, which was developed and operated jointly by the British and French governments. The project operated at a loss, but the two governments continued to support it because they had already spent billions of dollars on it, which they felt would be a total waste if they gave it up. This is a concrete example of how people often continue pursuing failed ventures out of fear of wasting time and effort.