It doesn't matter if we are talking about politics, economics, society or crytocurrencies and tokens, one of the most important things that shapes the way we act as humans are the incentives available. And very often we see people, organizations and governements trying to influence human behavior one way or another through offering all kinds of incentives.
For instance, here on Steemit, being a contributing member of the platform is incentivized through post rewards and the chance that you might get flagged if you are an abuser. And when things are not going perfectly and could be improved, there are hardforks that are implemented to adjust existing incentives or to introduce new ones. That's of course a pretty regular state of affairs, but when talking about incentives, we should always keep something in mind The Cobra Effect.
What is the Cobra Effect?
The Cobra Effect is when an incentive that was introduced to solve a problem actually backfires and makes the problem worse.
The origin of the term is a bit anecdotal and refers to a problem they had with venomous cobras in Delhi during the British colonial rule there. What supposedly happened was that the British government at the time decided to combat the problem of having too many venomous snakes around by offering a bounty to anybody who would bring in a dead cobra. The idea behind that move was to incentivize the local population to invest effort in fighting the problem on their own.
Unfortunately, the government did not seem to think their plan all the way through as what really happened was that some enterprising individuals viewed the bounty being offered as an opportunity for a steady income. So instead of going out and trying to hunt cobras down, they started breeding them. When the government realized that their solution was not really solving anything and that it was being exploited, they shut the program down. This, of course, did not just not solve the cobra problem, but exacerbated it, because all the cobra breeders had a bunch of cobras on their hands that they had no use for. This supposedly led to them being released back into the wild and making Delhi's cobra problem worse than it was before the government intervention.
Or How About The Rat Effect?
While The Cobra Effect does sound cool, the story about Delhi and cobras is actually unverified, so some people think this should be called The Rat Effect because of a similar failure to control animal population that happened in Hanoi, Vietnam while it was under French colonial rule.
As the verified story goes, Hanoi was struggling with an increasing rat population and in an attempt to control it, authorities started offering a bounty for each rat killed. But since they didn't really want to deal with piles and piles of dead rats, they decided that providing a rat tail was strong enough of a proof to get the bounty. Unfortunately, Hanoi soon started to notice more and more rats without tails running around. The thing was that rat catchers didn't really want the population of rats to be going down as this would hurt their income and make the job of catching rats harder, so what they did was to just chop of the tails of the rodents before releasing them back into the city, so they could procreate and keep the supply of fresh rat tails coming.
The Cobra Effect Can Be Seen Over And Over Again
Now while the two examples above are coincidentally from colonial times, examples of The Cobra Effect are something we can see all around us. It's not rare that different authorities, organizations or even individuals would try to influence the behaviors of others in a certain way to only see them respond in a very different way. Two of the most blatant examples of this happening on a large scale are the war on drugs and the prohibition in the US. Both measurements were aimed at decreasing crime rates, but only provided even more fertile grounds for organized crime, violence and social problems. They both not only didn't solve the supposed problem they were aiming at, but also left the country worse off.
The examples of The Cobra Effect rearing its instantly-recognizable hooded head are actually really numerous. That's why I think it's important to always remember it when talking about trying to influence behavior with this or that incentive (or even lack of incentives).
Thinking About Incentives All Backwards
In my opinion, the main reason we are seeing this happen besides the fact that human behavior is hard to predict is the way people are thinking about incentives and measures to reach a goal. What government and organizations often do is see a problem and then think of how they can incentivize people or the market to solve the problem on their own. That's a good first step, but this can only help you come up with a list of possible solutions. What is missing from this process which is obviously regularly being omitted is asking the crucial question What undesired behavior could this measure incentivize too? or the question How could this be abused?. While the particular incentive might be conducive to the desired solution, it is even more conducive to abuse or to other undesired behaviors.
Those are not hard question to come up with, but people are usually so happy about the solution that they have come up with that they prefer not to address them or don't really address them seriously enough. When you ask those questions, it's not that hard to rule out some solutions that can easily facilitate or stimulate abuse.
What does this have to do with Steemit?
Steem is an awesome platform, but it's also a platform that has changed significantly with each hardfork and is very likely to keep changing. And since this is basically a type of market, every hardfork is likely to be fiddling with existing incentives and introducing new ones. There are a lot of posts on the platform from people wanting to change this and that but I don't see many people asking themsleves What could go wrong if my suggestion actually gets implemented?. This is an important question to ask and I think each of us should ask themselves this question before we start advocating for or supporting a suggested change.
This is a platform and a market and since it has the potential to create a lot of value for the people participating, it's clear that some people will see incentives to abuse it. That's why it's important to also view each suggestion for the platform through the lens of The Cobra Effect. Asking ourselves if what we are supporting has the chance of backfiring is important. And while many of us don't really get a direct say in what is going to happen in the future, it's clear that the hardforks are actually influenced by popular community attitudes and ideas. That's why scrutinizing our own suggestions and/or support is an important thing to do if we want the Steem community to be thriving.
Thank you for reading! :)