Incentives & consequences
Why systems produce what they reward — and the perverse outcomes nobody intended.
"Show me the incentive and I’ll show you the outcome." Goodhart’s law warns that a measure ceases to be good once it becomes a target; the cobra effect shows well-meant rewards backfiring; Parkinson’s law and the Peter principle expose how organisations bloat and misplace people. Master this and you can predict behaviour without reading minds.
Key ideas here: Incentives, Goodhart's law, The cobra effect, Tragedy of the commons, Jevons paradox — and 5 more below.
Mental models
Incentives
Incentives are the rewards and punishments that drive behaviour. To predict what people will do, look not at what they say or intend but at what they…
Goodhart's law
Goodhart's law states that when a measure becomes a target, it ceases to be a good measure. Once people are rewarded for a metric, they optimise the…
The cobra effect
The cobra effect is when an attempted solution makes the problem worse, because the incentive it creates is gamed. People optimise the measure you…
Tragedy of the commons
The tragedy of the commons is when individuals, each acting in their own rational self-interest, deplete a shared resource that everyone needs —…
Jevons paradox
Jevons paradox is the counter-intuitive finding that making the use of a resource more efficient often increases total consumption of it — because…
The Streisand effect
The Streisand effect is when trying to hide, remove, or censor information unintentionally draws far more attention to it. The act of suppression…
The Peter principle
The Peter principle states that in a hierarchy, people tend to rise to their level of incompetence. Workers are promoted for being good at their…
Parkinson's law
Parkinson's law is the observation that work expands to fill the time available for its completion. Give a task a week and it takes a week; give it a…
Hanlon’s razor
Hanlon’s razor says: never attribute to malice that which is adequately explained by stupidity, carelessness, or circumstance. Most harm done to you…
The Overton window
The Overton window is the range of ideas the public currently finds acceptable to discuss and enact. Policies inside it are politically viable; those…
Related topics
The books behind better thinking
Listen to any of these free. Start a free Audible trial and get your first audiobook on the house.
Prefer to read? The canonical picks:
- Thinking, Fast and Slow — Daniel Kahneman
- The Art of Thinking Clearly — Rolf Dobelli
- The Great Mental Models, Volume 1 — Shane Parrish
- Poor Charlie’s Almanack — Charlie Munger
- Super Thinking — Gabriel Weinberg & Lauren McCann
- Seeking Wisdom — Peter Bevelin
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Editorial synthesis © ReadGlobe. Each idea links to a full reference page with sources.