Here we summarize under several categories the large number of criteria that could be employed to decide which set of candidate topics should be the focus of an NSF inducement prize program.

Criteria Related to Government Encouragement of Innovation

As for any other mode of government support of or incentives for innovation, inducement prizes should be offered in cases that comport with common understanding of the rationales for government involvement in the innovation process, namely, that the development and application of the hoped-for innovation meets the following criteria:

  • The contest goal is widely judged to be worth pursuing and is in fact among the most important challenges facing the nation.

  • If a prizewinning innovation is developed and put into practice, it will offer substantial practical benefit not only to its producers and users but also to the nation as a whole.

  • Pursuit of the innovation should be perceived as a high-risk but high-reward activity.

  • Without government intervention the market is unlikely to produce the innovation in a timely or effective manner, that is, the usual arguments from market failure for an affirmative federal involvement in the innovation process should apply to prize programs just as they do to other programs and policies intended to encourage innovation.

Criteria Related to the Use of the Inducement Prize Mechanism

The committee believes that offering inducement prizes is more relevant for pursuing some national goals than for others. To be appropriate as the target of an inducement prize, either in place of a grant program or as a supplement to it, the contest should have most of the following characteristics:

  • The prize goal should represent an ambitious effort, well beyond the current state of the art.

  • It is expected that the contest objective can be achieved within a reasonable time frame for a prize program; on the order of 2 to 10 years.

  • It will be possible to determine in a relatively objective manner whether a particular contestant’s innovation has in fact achieved the contest objective.

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