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It is the conflict that arises when someone acts on another's behalf, has different interests, and knows more than the person they act for, so cannot be fully checked.
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Mechanism design starts from a desired outcome and designs the rules of a strategic setting so that participants' self-interested choices produce it. Kidney exchanges and auctions are two major applications.
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Braess's paradox is the finding that adding a road to a network of self-interested drivers can raise travel times for everyone, because the resulting equilibrium is worse than before.
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The Jevons paradox is the case where making a resource more efficient to use raises total consumption of it. How often it happens is debated, though researchers agree it can.
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The cobra effect names a reward that worsens the problem it targets. The Delhi story behind it is probably apocryphal, but the incentive pattern it describes is real and well studied.
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