Incentives for innovation — contest design with proportional prizes

A longstanding topic for my research is how interventions that offer new incentives, like contests and bonuses, can guide innovation in the food system.  This is the work for which I was awarded the AAEA’s Bruce Gardner Memorial Prize for Applied Policy Analysis in 2013, and which was cited in the development of the multidonor $118 million AgResults incentive program for new inputs to boost agricultural productivity in Africa.

In recent years I have applied this idea to child nutrition, as explained by Tufts Nutrition Magazine from papers we published in the Journal of Health Economics and the Journal of Development Economics.  The economic theory and laboratory tests behind this were published recently in Journal of Economic Behavior and Organization.

For those interested in the background, my earlier writing on this is a July 2014 blog post on the AgResults website, and a May 2012 essay entitled Transformational Incentives for USAID’s Frontiers in Development  book and conference; with related CGD paper by Kim Elliott.  Those applications draw on a much more general research paper on theoretical predictions and experimental results in laboratory competitions, summarized in these presentation slides.

More details on the history and  motivation for new kinds of contests comes from an IFPRI Discussion Paper entitled Accelerating Innovation which describes the history and economics of innovation incentives, and shows how African agriculture could benefit from a new kind of technology contest in which proportional cash payments would be made to innovators after their technologies are adopted, like a royalty payment for non-market services.  Prize rewards would be strictly proportional to the extent of adoption and impact, using verifiable data from controlled experiments and farm surveys to document which new techniques work best in what areas. An earlier journal article, Paying for Prosperity: How and Why to Invest in Agricultural R&D for Africa motivates the idea in terms of what’s needed for poverty alleviation in Africa.  My first article on this subject was in 2003, entitled Research Prizes: A Mechanism to Reward Agricultural Innovation in Low-Income Regions.