Wednesday, January 31, 2007
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I want more prizes
David Leonhardt has a near-excellent column in the New York Times today on why prizes are 1) A great way to foster innovation, but; 2) far less popular than grants or other compensation schemes:
in the 1700s, prizes were a fairly common way to reward innovation. Most famously, the British Parliament offered the £20,000 longitude prize to anyone who figured out how to pinpoint location on the open sea. Dava Sobel’s best-selling 1995 book “Longitude” told the story of the competition that ensued, and Mr. Hastings mentioned the longitude prize as a model at that meeting back in March.A much smarter approach than Leonhardt's smarter approach would simply be for the government to simply offer large prizes -- we're talking in the billions -- for innovations that would reduce global warming. In return, the innovator would have to relinquish all intellectual property rights for the invention.
Beyond global warming, this approach should be used far more frequently for health care as well. Indeed, this is one of those tasks where government intervention might improve upon the market -- because the government has sufficient resources to withstand the inherent budgetary uncertainty that comes with the prospect of awarding prizes in the billions or tens of billions.
If the federal government can offer $25 million for capturing Osama bin Laden, why can't it offer a $10 billion prize for an AIDS vaccine?
I look forward to readers explain why I'm wrong.
The fuzzier the result desired, the more difficult for a prize to work. For example, the specifications for an AIDS vaccine would probably have to include things like effectiveness, safety, cost, etc., that would depend on human judgment. That gives anyone who wants to compete a much harder target to hit. The Netflix competition apparently has one metric, not a dozen.
(Not that capturing bin Laden is a real easy target.)posted by: Bill Harshaw on 01.31.07 at 07:48 AM [permalink]
Engineering a good competition for a prize is hard.
You need very clearly defined rules for evaluation, and often it needs to be "cool enough" that outsiders/others who wouldn't spend their time are going to spend some time & effort on the problem.
These two issues (Evaluatability and Coolness) are often big obstacles when constructing a challenge competition.
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