“(c) LIMITATIONS.—(1) The total amount made available for award of cash prizes in a fiscal year may not exceed $10,000,000. “(2) No prize competition may result in the award of more than $1,000,000 in cash prizes without the approval of the Under Secretary of Defense for Acquisition, Technology, and Logistics.

“(d) RELATIONSHIP TO OTHER AUTHORITY.—The program under subsection (a) may be carried out in conjunction with or in addition to the exercise of any other authority of the Director to acquire, support, or stimulate basic, advanced and applied research, technology development, or prototype projects.

“(e) ANNUAL REPORT.—Promptly after the end of each fiscal year, the Secretary shall submit to the Committees on Armed Services of the Senate and the House of Representatives a report on the administration of the program for that fiscal year. The report shall include the following: “(1) The military applications of the research, technology, or prototypes for which prizes were awarded. “(2) The total amount of the prizes awarded. “(3) The methods used for solicitation and evaluation of submissions, together with an assessment of the effectiveness of those methods.

“(f) PERIOD OF AUTHORITY.—The authority to award prizes under subsection (a) shall terminate at the end of September 30, 2003.”

14 See, for example, Farrell and Shapiro, 1992; Fullerton and McAfee, 1999; McLaughlin, 1988; Rogerson, 1989, 1994; Taylor, 1995.

15 See Fullerton and McAfee, 1999.

16 Clearly, prize contests can be structured to be highly risk-averse in the selection of goals and the criteria for competing and winning. Indeed, there is both documented and anecdotal evidence of contest administrators who were sufficiently risk-averse to prevent or delay the award of prizes to winners who had met the contest criteria. See, for example, the history of the chronometer's invention in Sobel, 1995.

17 For further information concerning the X Prize and the CATS Prize, see Appendix A, sections 2.1.6 and 2.1.7, or their websites: http://www.xprize.org and http://www.space-frontier.org/EVENTS/CATSPRIZE_1 (accessed 5 November 1999).

18 Contestants in the RoboCup include high school students, graduate students, postdocs, faculty as well as researchers based in other not-for-profit as well as for-profit organizations. For further information regarding the “micro-mouse” contests and the RoboCup, see the website for the International Micro Robot Maze Contest at http://www.mein.nagoya-u.ac.jp/maze and the Robot World Cup Initiative at http://www.robocup.org (accessed 5 November 1999).

19 This point was made by Neen Hunt, executive director of The Albert and Mary Lasker Foundation, in her prepared remarks to workshop participants on 30 April 1999. See also the conclusions of Zuckerman, 1992, regarding the educational/inspirational role of prizes.

20 See, for example, Colozza, 1990.

21 However, increasing the requirements of a contest in this way can shrink the pool of potential contestants. In the refrigerator contest, only large companies with distribution outlets in place could hope to compete. For further information concerning the SERP, see Appendix A, section 2.1.4, and also Langreth, 1994.

22 See Fountain, 1998. Fountain writes, “This form of capital, as powerful and physical as human capital, is the ‘stock' that is created when a group of organizations develops the ability to work together for mutual productive gain.”

23 Personal correspondence of 2 May 1999 from John S. Langford, President, Aurora Flight Sciences Corporation, to Proctor Reid, Associate Director, Program Office, National Academy of Engineering.

24 The Wolfskehl Prize was created in 1908 to reward whoever could prove Fermat's Last Theorem, i.e., that the equation xn + yn = zn has no whole number solutions for n greater than 2. The prize was won by Princeton professor Andrew Wiles in 1997. For further information concerning the Wolfskehl Prize, see Appendix A, section 2.1.13.

25 For further information concerning the Loebner Prize, see Appendix A, section 2.1.9. How much additional effort the Loebner Prize induces from prize contestants above and beyond what they would have done without the inducement of the prize is difficult to determine.

26 See note 6 above.

27 See, for example, Fullerton and McAfee, 1999.

28 For further discussion of “bandwagon effects” see Zuckerman, 1992, p. 228–229.

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