Thanks to Erika W. at X Prize, am reading a recent paper by Liam Brunt (University of Lausanne), Josh Lerner (Harvard) and Tom Nichols (Harvard) which examines a 19th century data set to discern insight into whether prize-awards are a useful mechanism to encourage innovation. The answer seems to be yes.
- Metric. The number of contestants the prize competition attracts.
- Entry fees. Discourage spurrious entrants.
- Money and medals. Used as substitutes, gold medal having largest entrant effect.
- Diffusion. Shows drew popular interest, spread of technical knowledge.
- Patents. Prize winners much more likely to patent after show than non. Interestingly, doubling of monetary award increases patent activity 6-7 percent in the technical area in the year of the show, while a gold medal has a 33 percent effect.
- Lead time. Providing longer lead times to inventors raised the number of entrants.
The paper concludes that, among other things, that the monetary awards covered only about one third of the costs of implements and machinery exhibited. More potent was the exposure from the show and “society’s mark of approval.”