Has there been any scholarly analysis of reward-based research incentive programs like the DARPA Grand Challenge or X-Prize that evaluate the economic model of offering a prize for research as opposed to upfront funding. I find it interesting that companies and universities invested far more (individually and collectively) in R&D to win the DARPA and the X-Prize Foundation contests than the value of the prize. I’d google it, but I don’t even know what such an incentive program is called.
I think the big incentive is that it is a high-profile prize with clearly defined goals. The money is usually nowhere near what it takes to develop the technology to win the prize so economics aren’t usually much of a motive except to offset some of the development cost. Research grants don’t usually induce the same type of competitive environment in the short-term. There can be multiple “winners” in those and partial successes are welcome. That is not true with the all-or-nothing prizes with clear cut criteria for success.