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MENTAL MODEL · M8205

Perverse Incentive

Perverse Incentive
BusinessHigh supportBehavioral Economics
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Version 1.0.0 · Updated 2026-07-28

CORE DEFINITION

In economics, a perverse incentive is an incentive structure with undesirable results, particularly one where those effects are unexpected and contrary to the intentions of its designers.

SCAFFOLDING EFFECT

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Reduce cognitive load

In economics, a perverse incentive is an incentive structure with undesirable results, particularly one where those effects are unexpected and contrary to the intentions of its designers.

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It promotes action through reverse arrangements where doing wrong or not doing incurs costs or loss of rewards, as opposed to positive rewards; moderate negative incentives can correct behavior, but excessive ones can undermine initiative.

MINIMUM ACTION

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Perverse_incentiveZH · Explicit
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