The Great Hanoi Rat Massacre occurred in 1902, in Hanoi, Vietnam (then known as French Indochina), when, under French colonial rule, the colonial government created a bounty program that paid a reward of 1¢ for each rat killed. To collect the bounty, people would need to provide the severed tail of a rat. Colonial officials, however, began noticing rats in Hanoi with no tails. The Vietnamese rat catchers would capture rats, sever their tails, then release them back into the sewers so that they could produce more rats.
Payment for treatment generates a perverse incentive for unnecessary treatments. In 2015, a Detroit area doctor was sentenced to 45 years of prison for intentionally giving patients unnecessary cancer treatments, for which health insurance paid him at least 17.6 million dollars. Unnecessary treatment may harm in the form of side effects of drugs and surgery, which can then trigger a demand for further treatments themselves.
In 2002, British officials tasked with suppressing opium production in Afghanistan offered poppy farmers $700 an acre in return for destroying their crop. This ignited a poppy-growing frenzy among Afghan farmers, who sought to plant as many poppies as they could in order to collect payouts from the cash-for-poppies program. Some farmers harvested and sold the sap before destroying the plants, receiving significantly more money for the same amount of poppies.
The Tax Reform Act of 1976 provided for loss of tax benefits if owners demolished buildings. This led to an increase in arson attacks in the 1970s as a way of clearing land without financial penalties. The law was later altered to remove this aspect.
[Vitaly Borker found that online complaints for DecorMyEyes (his site for selling eyeglasses) put the site at the top of Google searches. He then responded to bad reviews with insults, threats, and other harassment to continue ranking high.]
Funding fire departments by the number of fire calls that are made is intended to reward fire departments that do the most work. However, it may discourage them from fire-prevention activities, leading to an increase in actual fires.
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