A perverse incentive is a reward structure that reliably produces the opposite of its stated goal. They are not bugs. They are predictable outputs of a design.
Simplest definition: someone wrote down a measure to stand in for a goal, the measure became the target, and behavior optimized the measure while the goal drifted. Hanoi paid per rat tail and citizens bred rats. Wells Fargo paid per account opened and employees opened 3.5 million fake ones.
Two species, one anatomy. **Internal / personal** perverse incentives live inside the individual — the dopamine loop that rewards scrolling over sleeping, the identity payoff for being right over being curious. **External / systemic / organizational** perverse incentives live in policy, comp, regulation, and code. Most real failures are both at once.
Why now? Because as society's complexity climbs, the distance between the goal and the measure widens. More layers, more proxies, more places for the incentive to slip its leash. The cobra effect scales with the org chart.
Label every incentive in your world internal or external. Treat both as designed. Redesign both.