Innovation and Prizes

Looks like they work . . .

Inducement Prizes and Innovation.
Date: 2011-12-15
By: Brunt, Liam (Dept. of Economics, Norwegian School of Economics and Business Administration)
Lerner, Josh (Harvard Business School)
Nicholas, Tom (Harvard Business School)

http://d.repec.org/n?u=RePEc:hhs:nhheco:2011_025&r=ino

We examine the effect of prizes on innovation using data on awards for technological development offered by the Royal Agricultural Society of England at annual competitions between 1839 and 1939. We find large effects of the prizes on competitive entry and we also detect an impact of the prizes on the quality of contemporaneous patents, especially when prize categories were set by a strict rotation scheme, thereby mitigating the potentially confounding effect that they targeted only “hot” technology sectors. Prizes encouraged competition and medals were more important than monetary awards. The boost to innovation we observe cannot be explained by the re-direction of existing inventive activity.

One thought on “Innovation and Prizes

  1. Agreed!

    However I’ve recently found myself staying up ridiculous hours through the night to bang out a last minute entry in http://aichallenge.org/ and there is no prize! Well, other than fame and reputation, and possibly a job offer from google. Not that my entry is particularly good (I’ll probably scrape a place in the top thousand) but when you look at the top hundred they are cracking good, and must represent very significant man hours in effort, not to mention genuine talent. What’s more, many of those entrants have already explained their methodology on blogs, etc and some intend to release their entire code.

    Obviously there’s a severe shortage of viable opportunities out there for individuals intent on striving… but maybe that’s a good thing. Think what would happen if these guys got money behind them. Perhaps the real challenge of good governance is figuring out how to hold technology back…

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