Using electronic markets to achieve efficient task distribution

  • Ian Grigg
  • Christopher C. Petro
Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 1318)


The Internet was built using the efforts of a worldwide team of programmers that coordinated and competed through laissez-faire methods. Much of the effort was freely provided, or paid for by entities in a process that did not conform to normal commercial revenue-seeking or government regulatory behaviour. This points to major inefficiencies in the market for software. One inhibitor is the large search costs undertaken by managers to acquire new programmers.

On the other hand, there are inherent inefficiencies in the way in which much of the free Internet software is developed. Specifically, there is no efficient way for users to direct the efforts of developers, other than by contracting for entire projects. This often results in a mismatch between development and requirement, as user communities and developer communities are sufficiently culturally different to make communication non-perfect.

We propose a market-based solution that allows many users to each contribute small amounts to projects, and for the sum effect of these contributions to influence and direct the activities of programmers towards tasks that users demand. A range of solutions is presented, from a web billboard bounty market to trading exchange markets for digital financial instruments. Reputational effects, intermediaries and differentiation are considered.

Relying on the existante of efficient electronic payment mechanisms and the efficiency promised by new electronic markets (both web billboard and digital financial instrument forms), we submit that the markets proposed could make small tasks more readily directable over the Internet, and could significantly enhance the efficiency of certain classes of software development.


Cash Flow Software Development Initial Public Offering Search Cost Software Project 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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  17. Dramatis Personae. We will use the cryptographers' friends to play our parts. Specifically. Alice, is a proposes of tasks, and Bob and Carl can programmers. Dave will be a manager (responsible for the production of others). Victor is a verifier of other's claims. Walter is an intermediary who watches (and protects) the interests of others. Bruce Schneier, Applied Cryptography, 2nd edition. Users are, as always. users, and represent the buying mass of the market.Google Scholar
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Copyright information

© Springer-Verlag Berlin Heidelberg 1997

Authors and Affiliations

  • Ian Grigg
  • Christopher C. Petro

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