Accelerating the Use of Prizes to Address Tough Challenges

Tom Kalil and Jenn Gustetic in DigitalGov: “Later this year, the Federal government will celebrate the fifth anniversary of, a one-stop shop that has prompted tens of thousands of individuals, including engaged citizens and entrepreneurs, to participate in more than 400 public-sector prize competitions with more than $72 million in prizes.

The May 2015 report to Congress on the Implementation of Federal Prize Authority for Fiscal Year 2014 highlights that is a critical component of the Federal government’s use of prize competitions to spur innovation. Federal agencies have used prize competitions to improve the accuracy of lung cancer screenings,develop environmentally sustainable brackish water desalination technologies, encourage local governments to allow entrepreneurs to launch new startups in a day, and increase the resilience of communities in the wake of Hurricane Sandy. Numerous Federal agencies have discovered that prizes allow them to:

  • Pay only for success and establish an ambitious goal without having to predict which team or approach is most likely to succeed.
  • Reach beyond the “usual suspects” to increase the number of citizen solvers and entrepreneurs tackling a problem.
  • Bring out-of-discipline perspectives to bear.
  • Increase cost-effectiveness to maximize the return on taxpayer dollars.
  • Inspire risk-taking by offering a level playing field through credible rules and robust judging mechanisms.

To build on this momentum, the Administration will hold an event this fall to highlight the role that prizes play in solving critical national and global issues. The event will showcase public- and private-sector relevant commitments from Federal, state, and local agencies, companies, foundations, universities, and non-profits. Individuals and organizations interested in participating in this event or making commitments should send us a note at challenges [at] by August 28, 2015.

Commitments may include the announcement of specific, ambitious incentive prizes and/or steps that will increase public- and/or private-sector capacity to design high-impact prizes and challenges. For example:….

  • Foundations could sponsor fellowships for prize designers in the public sector to encourage the development and implementation of ambitious prizes in areas of national importance. Foundations could also sponsor workshops that bring together companies, university researchers, non-profits, and government agencies to identify potential high-impact incentive prizes.
  • Universities could establish courses and online material to help students and mid-career professionals learn to design effective prizes and challenges.
  • Researchers could conduct empirical research on incentive prizes and other market-shaping techniques (e.g. Advance Market Commitments, milestone payments) to increase our understanding of how and under what circumstances these approaches can best be used to accelerate progress on important problems.
    Working together, we can use incentive prizes to inspire people to solve some of our toughest challenges. (More)”