Have you tried to do something good to help somebody, and the end result was that you regretted doing it? My nephew is doing some research on the subject as a part of his college submission, and was discussing the same with me. He shared something called the Law of unintended consequences. A part of his submission, I am posting here.
(I could also share with him something which happened on TJ, where a good thread of Combing trend and VWAP by Pratapbv created contraversy, and a good man stopped posting on his thread - unfortunately)
So what is the law of unintended consequences?
The Cobra effect.
http://en.wikipedia.org/wiki/Cobra_effect
The cobra effect occurs when an attempted solution to a problem actually makes the problem worse. The term cobra effect stems from an anecdote set at the time of British rule of colonial India. The British government was concerned about the number of venomous cobra snakes in Delhi. The government therefore offered a bounty for every dead cobra. Initially this was a successful strategy as large numbers of snakes were killed for the reward. Eventually, however, enterprising persons began to breed cobras for the income. When the government became aware of this, the reward program was scrapped, causing the cobra breeders to set the now-worthless snakes free. As a result, the wild cobra population further increased. The apparent solution for the problem made the situation even worse.
A similar incident occurred in Hanoi, Vietnam, under French colonial rule. The colonial regime created a bounty program that paid a reward for each rat killed. To obtain the bounty, people would provide the severed rat tail. Colonial officials, however, began noticing rats in Hanoi with no tails. The Vietnamese rat catchers would capture rats, lop off their tails, and then release them back into the sewers so that they could procreate and produce more rats, thereby increasing the rat catchers' revenue.
(Historian Michael Vann argues that the cobra example from British India cannot be proven, but that the rats in Vietnam case can be proven, so the term should be changed to the "rat effect)
Related : Perverse incentive is an incentive that has an unintended consequences and an undesirable result which is contrary to the interests of the incentive makers.
19th century palaeontologists traveling to China used to pay peasants for each fragment of dinosaur bone (dinosaur fossils) that they produced. They later discovered that the peasants dug up the bones and then smashed them into many pieces, greatly reducing their scientific value, but which resulted in a higher payment to the peasants.
In life, we are all governed by laws - legal, social, moral, natural. Some of these are not written, but known by us at an unconscious level. It helps to be aware the basic principal that govern these laws of life. As I write this, wondering how many of these relate to trading, which we disregrad, neglect, brush off or violate? Food for thought.
