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Monday, May 19, 2014

The Derponomicon: Part 6

Here is his response to wikipedia's article on perverse incentives:

On perverse incentive.... While many laws, regulations, government programs, etc. have "Monkey's Paw"-like negative consequences like the examples given in the Wikipedia examples, the slightest bit of forethought or amendment would solve most of these issues. And while I am sure you meant to look at this from the perspective of government regulation and programs, there are probably plenty of examples of these sorts of things happening in the private sector and across the board. To give a few examples of how these "life hacks" to these rules and regulations can be amended or changed to close the loopholes here are the following; For the rat bounty....simply add a clause that says any farmed rats discovered would require the bounty hunter to pay double the bounty back for fraud. Granted it might be hard for them to be discovered, but the fear of getting caught would probably discourage the practice. On fire departments, pay the incentives to whoever has the LEAST amount of fires in their district. For the dinosaur bones, pay by the pound instead of the fragment. On Medical reimbursements, that ship has pretty much already sailed. We have a for profit health care system, which both parties fought to keep. The only thing that could rectify it is single payer health care like every other civilized nation on earth has. On the Bangkok armbands, they seem to have already rectified the problem. On endangered species, offer a reward to landowners who report endangered species on their land and offer them a fair, or over market value of their land for preservation. There are plenty of private and non profit organizations that would even back the program like the Nature Conservancy to offset any associated costs to taxpayers. This may create an incentive for landowners to try and introduce endangered species to their land, but the risks would be high and investigating biologists would easily be able to tell if it was just a handful of examples or a viable population. Earning bonuses for CEOs should all be paid in company stocks that they have to keep for 5 or 10 years before cashing them in. This would prevent them from artificially inflating or manipulating earnings since their financially invested in the company, and would suffer tremendous losses if the company goes bankrupt or crashes. The 5-10 year rule would give them a long term investment incentive as well. Most of these things are an easy fix, some would be very difficult, but to semi quote Dr. Ian Malcolm "Humans will always find a way."

And of course, the solution to laws with unintended consequences is just to make more laws. Because there couldn't possibly be unintended consequences with those laws, right? 

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