A perverse incentive, as described by Daniel Schmachtenberger, refers to a motivator that, despite being intended to produce a positive outcome, inadvertently encourages behaviors that lead to unintended and often detrimental consequences. This kind of incentive emerges from a myopic design in systems where the metrics and rewards are misaligned with the overall health and long-term sustainability of the system. Perverse incentives can skew individual or organizational actions towards short-term gains at the expense of systemic integrity, fostering counterproductive or even destructive outcomes. They underscore the critical importance of holistic thinking and the alignment of incentives with the broader, more nuanced effects on complex, interdependent systems.

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