Technology Prizes & Prediction Markets

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ABC7 Futures Market: Will the $25 million dollar reward for developing something that will extract greenhouse gases be handed out in the next 5 years?


Virgin Earth Challenge:

The Virgin Earth Challenge is a prize of $25m for whoever can demonstrate to the judges&#8217- satisfaction a commercially viable design which results in the removal of anthropogenic, atmospheric greenhouse gases so as to contribute materially to the stability of Earth’s climate. […]

The purpose of the Virgin Earth Challenge is to encourage the development of commercially viable new technology, processes and methods to remove anthropogenic greenhouse gases from the atmosphere to improve the stability of the Earth’s climate.

Entrants must submit a commercially viable design (the “Design”) to achieve the net removal of significant volumes of anthropogenic, atmospheric greenhouse gases each year for at least 10 years without countervailing harmful effects (the “Removal Target”). The removal achieved by the Design must have long term benefits (measured over say 1,000 years) and must contribute materially to the stability of the Earth’s climate.

The prize fund will be awarded to (or shared amongst) any entrants whose Design (in the opinion of the judges) achieves or appears capable of achieving the Removal Target and other criteria set out in paragraph 7 and which in the opinion of the judges makes an outstanding contribution by way of innovation in the fields of engineering or the other physical technologies or in the application of the physical sciences, which is or will be for the benefit of the Earth’s climate. […]

Richard Branson:

History has shown that Technology Prizes have been invaluable in encouraging technological advancements and innovation in many, many areas of science and industry. From the very first recorded prize offered by the British government in 1714, offering three financial incentives to the inventor who developed a device capable of measuring longitude within a given degree of accuracy. The Prize, which has been immortalised in the book Longitude, was won by John Harrison, a self-educated clock maker. Harrison was awarded ?20,000 in 1773 for devising an accurate and durable chronometer.

But prizes were not just the domain of the British- in the 18th Century the French also used Prizes as an incentive to fuel innovation. In 1775 a 100,000 franc prize was offered to the individual who could produce an artificial form of alkali – the wining of this prize was to form the basis of the French chemical industry. Today, vacuum packed food in our fridges and cupboards is nothing remarkable, but it may surprise some to know that it was actually a Prize offered by Napoleon in 1810 which led to Nicolas Appert coming up with a method of vacuum packing cooked food in glass bottles – it took him 15 years of experiments but in the end won him 12,000 francs!

It wasn’t long before newspapers and private sector companies became involved in setting up Prizes to encourage development in many areas. The American automobile industry was encouraged to grow through inducements to win prizes by competing in races set up by newspapers such as the Chicago Tribune in the late 19 th Century. Aviation and the development of long distance flying were greatly encouraged by similar prizes to those offered in America for the fledgling automobile industry. The Daily Mail prize for example, for the first flight across the Channel, was won by Louis Bleriot in 1909- and ten years later, Alcock and Brown won the Mail prize for crossing the Atlantic. Lindebergh was competing for a prize when he flew in the Spirit of St Louis, non-stop from New York to Paris in 1927. The Spitfire was the result of the Schneider trophy, which was a series of prizes for technological development.

The most recent technological Prize was awarded in the area of space travel, and is one that I have come to know very well – the Ansari X Prize – a $10 million dollar Prize set up by Peter Diamandis and funded by the Ansari family. The Ansari X Prize was won in 2004 by Paul Allen, Burt Rutan and Scaled Composites when they successfully flew SpaceShipOne to space and back twice within two weeks. The technological feat of SpaceShipOne resulted in the Virgin Group licensing that technology to build five space ships and two White Knight carrier crafts and has given birth to a commercially viable space tourism industry for the future. Using the latest technology in hybrid rocket motors and next generation turbo fan engines SS2 and WK2 will be environmentally benign.

Previous: You Want Innovation? Offer a Prize –not a Grant. + Stiglitz on using Prizes to Stimulate Innovation

One thought on “Technology Prizes & Prediction Markets

  1. Chris. F. Masse said:

    Catch The Carbon, Win A $25M Prize

    Prof. Robin Hanson of George Mason University has studied the history of prizes recently told The New York Times that accolades were more effective than grants in driving innovation. “These are the two essential advantages of prizes: They pay for nothing but performance, and they ensure that anyone with a good idea — not just the usual experts — can take a crack at a tough problem,” he was quoted as saying.

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