Tag Archives: R&D

Technological Innovation and Prize Incentives – by Luciano Kay

January 18, 2013

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Photo: Jeff Foust, Creative Commons 2.0

Photo: Jeff Foust, Creative Commons 2.0

Inducement prizes – the old trick of offering cash rewards to motivate the attainment of targets — have become very popular in the last decade. Advocates argue that prize sponsors can effectively attract people to compete and solve a wide range of today’s challenges by setting an appropriate set of rules and offering a sizable cash purse. Moreover, some scholarly works have analyzed the potential advantages that prizes may have over more traditional incentives to promote science and technological innovation. Government agencies, companies and other non-profit organizations, then, look with much interest at this phenomenon and seek to implement their own prize competitions.

But although these prizes have long been used and may have led to valuable discoveries and inventions, little empirical evidence has been around to fully understand how prizes work. My book “Technological Innovation and Prize Incentives” seeks to fill that knowledge gap and provides some answers to key questions such as the relative importance of the cash purse and other motivations to participate in prizes, the characteristics of research and development (R&D) activities induced by prizes, the characteristics of the technologies developed in prize competitions, and—more importantly—whether prizes spur innovation over and above what would have occurred anyway thanks to other traditional innovation incentives already in place.

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