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A good example of the feedback effect has to do with automotive safety regulation. Since the 1960s, the federal government has required the automobile manufacturers to make cars increasingly safer. The desired result was fewer injuries and deaths for drivers and their passengers involved in accidents. According to economist Sam Peltzman, however, due to the feedback effect, drivers have begun driving more recklessly. Automobiles with more safety features have been involved in a disproportionate number of accidents. According to the Insurance Institute for Highway Safety, the number of deaths in auto accidents remained essentially unchanged between 1991 and 2001. The feedback effect has also been called the law of unintended consequences. What did the government overlook as the public’s response to increased safety regulation of cars?

Operation Management, Management Studies

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