Despite my better judgement , I am fascinated by DARPA’s Network Challenge. The basic idea is simple: on this Saturday, December 5th, at 10AM (EST), ten large red weather balloons with be placed in various locations in the USA. The first person to report the locations of all balloons wins $40K. This seems to be an exercise in crowdsourcing, and it is not difficult to see various reasons why the US military may be interested in such an exercise.
If you want to win, the question seems to be how to get many potential balloon-sighters to report their findings to you rather than to someone else. Offers of $1K for the first sighting of a balloon (conditioned on winning) came fast, soon to be trumped by $3K offers, which is within a factor of 4/3 from optimizing this approach. Indeed the prize amount seems to be intentionally low, as to provide barriers to this natural monetary technique. At this point, the edge of rationality, non-monetary rewards were started to be offered, like world peace or, my favorite, “use the winnings to create a giant flying cupcake built entirely out of balloons!“. My own contribution (probably discovered independently by countless others) is the observation that the monetary technique is not really limited by the prize money: winning may have significant advertising value for the right kind of company, who may invest much larger amounts of money in attracting collaborators to its effort.