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U.S. Government Increasingly Embracing Prizes to Spur Innovation

By Doug Messier
Parabolic Arc
November 4, 2009
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Want a solution? Try offering a prize
US government joins soaring use of contests to engage innovators
Boston Globe

In pursuit of a prestigious prize, people often push the boundaries of what is possible.

The $10 million Ansari X Prize proved that to be true five years ago, when its winners launched a private manned vehicle into space. The prize spawned a resurgence of high-profile competitions, with private foundations and companies putting up hundreds of millions of dollars to solve technological challenges as urgent as building more efficient cars, and as trivial as predicting what movies people would like.

Recently, prize fever has also breached the thick walls of government bureaucracy, and more federal agencies are using competitions as a strategy to spur innovation. The competitions leverage modest amounts of taxpayer money to attract inventors and investors to certain scientific and technological problems.

“Prizes work very well because they are not just about money; they are about recognition,’’ said Calestous Juma, a professor at the Kennedy School of Government at Harvard University. “They work best in areas where you have a large degree of uncertainty and limited knowledge of who is doing what. The prize becomes like a signaling mechanism and people start to devote their talents and energy to solving the problem.’’

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