The Cobra Effect, also known as perverse incentives, is a term used by German economist Horst Siebert to describe unanticipated negative outcomes when a reward or incentive is provided to address a problem.
According to legend, Delhi experienced a cobra infestation many years ago in colonial India. As a result, the British established a bounty for cobra skins. They believed that by paying people for dead cobras, the public would reduce the problem of snake overpopulation. However, humans started raising cobras for their skins rather than murdering wild ones.
Eventually, the British realized the cobra farming industry and discontinued the bounty. However, since there were no rewards to collect, the cobra farmers released their snakes into the city, which made the infestation worse than it already was. The so-called Cobra Effect takes its name from this (possibly fictional) incident.