Hi everyone,
Nick suggested I circulate a paper describing our recent work on crowdsourcing and mechanism design. Motivated by the Red Balloon Challenge, we present a simple model for crowdsourced information gathering where verification of reports is encouraged through penalties and monetary compensation. We derive an optimal way to distribute the reward among the agents along the referral path leading to the answer. The payment rule can be described as “pass half of your reward to the recruiter”, which is exactly the rule used by the MIT team that won the challenge.
The paper is at http://intranet.orchid.ac.uk/dropbox//Publications/balloons.pdf
Cheers,
Victor
P.S. Please do not disseminate the paper further, as it currently under review.