Marginal Revolution: Prizes and Open Source Software

October
S	M	T	W	Th	F	St
			1	2	3	4
5	6	7	8	9	10	11
12	13	14	15	16	17	18
19	20	21	22	23	24	25
26	27	28	29	30	31

« John Edwards on health care, part II | Main | The marginal product of Super Bowl events, reflected in betting markets »

Prizes and Open Source Software

Richard Branson and Al Gore announced today a $25 million prize for the best way to remove significant amounts of carbon dioxide from the atmosphere.

Prizes can draw on dispersed knowledge to produce solutions that were unlikely to have been foreseen in advance. Open source software has a similar advantage - with enough eyes all bugs are shallow.

I think prizes are becoming more common not because people have suddenly learned of their advantages but because the internet has magnified their advantages. A prize today can at low-cost attract and draw from a much larger pool of contestants than in the past. The rise of open source software and the rise of prizes are thus similar responses to the same improvement in communications technology.

Thanks to Lance at A Second Hand Conjecture for the pointer.

Posted by Alex Tabarrok on February 9, 2007 at 02:13 PM in Economics, Law, Web/Tech | Permalink

Comments

"Richard Branson and Al Gore announced today a $25 million prize for the best way to remove significant amounts of carbon dioxide from the atmosphere."

Perhaps they should shut up

Posted by: Bill at Feb 9, 2007 4:02:32 PM

"Open-source software":

Are you hinting us that you, MR guys, are going to move from TypePad (proprietary software) to Word Press (open-source blogging software)?

Posted by: Midas Oracle at Feb 9, 2007 4:14:52 PM

Good for them. Global warming does lend itself quite well to tournaments, saince it's a search for a solution to a particular problem.

Posted by: Keith at Feb 9, 2007 4:26:18 PM

See the Wall Street Performer Protocol, which proposes a combination of prizes and assurance contracts (software completion bonds) for the private funding of open source software development.

Posted by: anon at Feb 9, 2007 4:41:58 PM

"Perhaps they should shut up"

What an odd reaction.

Most reasonable people on both ends of the ideological spectrum agree that man made global warming is occurring.

I was under the impression that the debate was what action, if any, should be taken by governments -- not private individuals. I would think that a private response to the problem would be applauded by all (i.e., environmentalists and free-marketers).

On what grounds do you object to these private individuals spending their own money how they see fit?

Posted by: golddog at Feb 9, 2007 4:42:16 PM

Golddog -- Government action is one thing, but the pursuit of profit is perhaps more powerful than any government regulations. Currently, it is widely believed that the pursuit of profit drives companies to polute, requiring government action to limit business practices.

The trick to effectively managing this problem is convincing the business & investment community that there is more profit to be gained from developing environmentally friendly solutions than there is in disregarding polution practices.

On piece of evidence: Toyota, Honda vs. Ford, GM

Everyone should check out Natural Capitalism by Hawkin, Lovins & Lovins. It won't disappoint.

In response to the prize being discussed: The solution to these problems are already in place.

It is the implementation of a massive ammount of incremental changes in all design practices major polluters and energy consumers: autos, buildings, factories, etc.

Couple that with a few hundred million trees planted and a improved protection of existing nature, and one day, you could see a cleaner air than the day before.

The trouble is, very few organizations/people have implemented more than a few at once.

Posted by: Paul Allen at Feb 9, 2007 5:16:04 PM

Well, I guess I'm not reasonable.

They can stop flying around, disburse the UN to their own countries, same w/Congress to their home states. Ban private jets.

Posted by: Sandy P at Feb 9, 2007 5:26:28 PM

See this post at Reason about the distinction that Jimmy Wales (the founder of Wikipedia) draws between individualized open sourcing (i.e. Wikipedia, where a determined individual can stand up and prevail against the tyranny of the majority) and the "mystical collective intelligence" (i.e. centralized planning and collectivism).

Posted by: Christopher Monnier at Feb 9, 2007 5:30:24 PM

What open source software really does is tap the pool of software developers who can't find or won't look for market validation of their creations... people who can't or won't sell what they make. There are plenty of geeks who want to stick it to the man, but strangely, real innovation still comes mainly from commercial sources.

Similarly, I think these prizes tap the pool of people who won't go commercialize their own solutions. To the extent the pool of people who have something to contribute but can't figure out the business end is large, the prizes might be valuable stimuli. Or they'll be small bonuses for people who figure out the business end anyway.

Posted by: Brad Hutchings at Feb 9, 2007 7:16:10 PM

"Most reasonable people on both ends of the ideological spectrum agree that man made global warming is occurring."

What an odd statement. Global warming skeptics are everywhere. Try here:
http://www.becker-posner-blog.com/archives/2007/02/global_warming_1.html

Posted by: Dennis Mangan at Feb 9, 2007 9:13:29 PM

Dennis: While I have to applaud the skeptics for their contrarian posture, it doesn't make them reasonable people.

Posted by: Paul Allen at Feb 9, 2007 11:05:26 PM

Actually, the non-skeptics aren't "reasonable". To be a "reasonable person" (or a non-skeptic) you have to believe that not only is AGW happening, you have to believe that it's the world's number one priority, and requires a monstrous level of resource reallocation to deal with it. All other positions make you a denier, an oil-company dupe, "in denial" or just plain evil.

I'll happily stick with skepticism, not so much about GW, but about the "A" part, especially the nastier bits about the $trillions that bureaucrats and politicians want to grab ahold of.

Posted by: Foobarista at Feb 10, 2007 5:02:57 AM

As a "global warming skeptic", I still have to agree with golddog. If private citizens want to spend their money to reduce carbon dioxide in the atmosphere, who am I to complain? It seems clear that people are adding carbon dioxide to the atmosphere above what would be there without us (the "skeptic" part is that I don't think it will have much effect). So if someone wants to try to remove this excess CO2 with there own money, go for it. I don't think it will accomplish anything useful for humanity, but then again, I'm not being asked to spend anything either.

Posted by: Josh at Feb 10, 2007 7:54:02 AM

Michael Kremer has written in the past about contests for the provisioning of global public goods (such as vaccines): http://reason.com/blog/show/102338.html#36758

"New institutions and new kinds of institutions--perhaps even some that have been tried before, like the French government's purchase and placing in the public domain of the first photographic patents in the early nineteenth century (see Kremer (1998))--may well be necessary to achieve the fourfold objectives of (a) price equal to marginal cost, (b) entrepreneurial energy, (c) accelerating the cumulative process of research, and (d) providing appropriate financial incentives for research and development. The work of Harvard economist Michael Kremer (1998, 2000), both with respect to the possibility of public purchase of patents at auction and of shifting some public research and development funding from effort-oriented to result-oriented processes (that is, holding contests for private companies to develop vaccines instead of funding research directly), is especially intriguing in its attempts to develop institutions that have all the advantages of market competition, natural monopoly, and public provision."

Posted by: archer at Feb 10, 2007 7:58:51 AM

with enough eyes all bugs are shallow

If only this were actually true.

Posted by: agm at Feb 10, 2007 3:17:50 PM

Plant more trees, quit subsidizing transport and infrastructure.

I'll take a Swiss bank account.

- Josh

Posted by: Wild Pegasus at Feb 10, 2007 3:43:26 PM

Plant more trees, quit subsidizing INEFFICIENT transportation and infrastructure.

Posted by: Paul Allen at Feb 10, 2007 6:48:08 PM

Foobarista: You're mixing the political rhetoric used by activists with beliefs about reality. Activists always have fiery rhetoric, and make their issue into the biggest one in the world. They always use inflamatory language and images, and try to make a moral crusade of their movement. That kind of rhetoric and belief is part of what holds that kind of movement together.

But that doesn't tell you anything about whether their factual statements are true, or their proposed solutions are good ones.

People who study climate modeling and biogeochemistry seem to mostly believe that there is global warming, and that some of it is caused by human CO2 emissions. That looks to be the best available picture of reality right now, as far as I can tell. We need to be thinking about how to respond to this, because addressing the problem is likely to take a long time.

The best comment I saw about this was on Nick Szabo's blog, Unenumerated. He pointed out that historically, the hard part about addressing an environmental problem wasn't the science or the political will, it was getting the administrative and legal mechanisms to regulate it into place. He proposed that we should be getting those mechanisms into place now--carbon taxes, emissons trading, etc.--even at very low costs. The goal isn't to start decreasing CO2 emissions right away, it's to get experience running the regulatory system for awhile and get the big bugs worked out, before we start using it for real. (But google for his blog and read the post, it was more articulate than I'm being.)

Posted by: albatross at Feb 10, 2007 9:51:04 PM

"What an odd reaction...etc"

And I find yours quaint, to put it charitably. Please tell me how Al Gore has contributed private funds to combat global warming? Royalties from a book, or perhaps from that overblown and disingenuous piece of tripe masquerading as truth? I think not.

Al has, "lent his name" to the cause. This involves a lot of carbon-intensive, environmentally unfriendly travel. Perhaps he should utilize the internet that he invented instead. If Branson wants to blow his money on this, fine, no problem there, and if I had to do it over again, I would have more pointedly singled out Al, who needs 16,000 square feet of space in his two residences that do not use "green" energy, though it only costs a few pennies per kilowatt hour more.

As for your unfortunate choice of 'reasonable', which any reasonable person would recognize as the first step towards ad hominem, I'd like to point out that if you believe Al Gore trusts the market for anything besides groceries, I have an environmentally unfriendly bridge in which you might be interested.

Posted by: Bill at Feb 10, 2007 9:51:57 PM

Hmmm, via Bros. Judd:

Cosmic rays blamed for global warming
By Richard Gray, Science Correspondent, Sunday Telegraph

Man-made climate change may be happening at a far slower rate than has been claimed, according to controversial new research.

Scientists say that cosmic rays from outer space play a far greater role in changing the Earth's climate than global warming experts previously thought.

In a book, to be published this week, they claim that fluctuations in the number of cosmic rays hitting the atmosphere directly alter the amount of cloud covering the planet.

---

And then there's what's going on in Niger - more rain, more trees, more income, desert going green.

Posted by: Sandy P at Feb 11, 2007 11:48:19 AM

Now, a question about these models, are some really from the 50s and 60s with tweaks?

Discussing the same at David's Medienkritik, found this post by Helian:

...The same thing is now going on with climate modeling. We are trying to model a problem with literally billions of degrees of freedom, and we don't have even close to a good historical record of all the parameters we would need to construct an accurate model. The big codes are garbage in, garbage out. The good news is that computational physicists have started to realize they're up against it. They are actually looking at radically new ways to address the problem. The same thing is happening in a number of other areas in addition to climate modeling. The usual approach in the past has been to discretize everything in site and try to solve problems by brute force, usually using models that were quite dated. For example, in my specialty, radiation transport, models are still regularly used that were developed in the 50's, and some of the most "recent" stuff is just incremental improvement of models that were developed in the late 60's. The hubris of the computational physicists is starting to wear thin. When you go to 3D geometry and problems with complex physics, even the fastest modern computers running parallel code are brought to their knees. The whole climate change thing, along with some other very difficult and complex problems that depend on "stochastic" variables, that is variables that are not fixed but that can vary according to some probability distribution, has led to some very exciting new initiatives....

Posted by: Sandy P at Feb 11, 2007 11:53:55 AM

Plant more trees, quit subsidizing INEFFICIENT transportation and infrastructure.

Do you think you can determine efficiency without markets? Back to Hayek for you.

- Josh

Posted by: Wild Pegasus at Feb 11, 2007 12:11:38 PM

“but because internet has magnified their advantages”
Does this phrase mean that internet has positive externalities for their announcement?

Posted by: Caleb at Mar 27, 2007 11:22:21 AM

this is obviuously false
there is just as much CO2 in the air now as 100 million years ago

Posted by: tom at Apr 16, 2007 9:34:12 PM

everyone here is a jerk
stop commenting on what you don't know

Posted by: tom at Apr 16, 2007 9:37:10 PM

liqingchao 07年8月14日