During British rule in India, there was a large population of venomous cobras, which posed a serious threat to people, especially in urban areas. To reduce the cobra population, the British colonial government came up with an incentive policy: they offered a bounty for every dead cobra. People could bring in dead cobras and receive a cash reward in return.

At first, the plan seemed successful, as people began hunting cobras to claim the bounties. However, some enterprising individuals quickly found a way to exploit the system. Instead of just hunting wild cobras, people started breeding cobras in secret so they could kill them and turn them in for the reward. When the government found out that people were breeding cobras to game the system, they discontinued the bounty program.

Without the incentive, the breeders had no reason to keep the cobras and released them, leading to an even larger cobra population than before. Thus, the policy not only failed to solve the problem but ended up worsening it.

This “cobra effect” has since become a metaphor for unintended consequences in policy-making and economics, where interventions end up backfiring due to unforeseen behavioral responses.