Perverse Incentives

Monday, September 7th, 2015

In China and Taiwan, drivers who’ve hit someone with their car may attempt to kill the person. Why?

[I]f you cripple a man, you pay for the injured person’s care for a lifetime. But if you kill the person, you “only have to pay once, like a burial fee.”

Because the legal system has often failed to prosecute these murders, a perverse incentive has been created. Once a driver hits an individual, the financially prudent move is for him to kill the injured party, rather than allowing them to live with a severe injury.

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