Common Tragedies

Thoughts on Environmental Economics

The Netflix prize

Posted by Rich Sweeney on November 14, 2007

The NYTimes reports that the first round of the Netflix prize did not result in the $1 million reward being given out. The goal was to improve Netflix’s matching algorithm by 10%. 27,000 contestants from 161 countries competed, but, tellingly, the top teams were all affiliated with large, well funded institutions.

Was the prize/competition format optimal for this task?

The closest team, AT&T, spent over 2,000 hours on the project. With only $1 million at stake and a large number of entrants, this doesn’t appear to have been a profit maximizing endeavor by AT&T.

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