A perverse incentive is an incentive system or policy that unintentionally or inadvertently encourages people to behave in ways that are counter to the overarching objectives of the policy. This could be due to the structure of incentives being misaligned or not providing appropriate motivators, resulting in perverse outcomes. Incentive mechanisms that create perverse incentives have the potential to have serious, unintended long-term economic effects and can create market distortions if left unchecked.

See also: race to the bottom, confirmation bias, collective action, coordination failure