A few months ago someone posted a story about how clinics were rewarding and 
fining people in cash depending on their attendance of booked appointments. 
The theory was that incentives would reduce missed appointments. But in fact 
they had no effect on peoples' behaviour, because the amounts concerned were 
too low and people had begun seeing the fine as a payment for extra free 
time in which they could do something more interesting or rewarding than 
attend a clinic.

Mobile phone millionaire Mo Ibrahim has a scheme to reward well-behaved 
African heads of state with $5 million and a post-retirement stipend. "The 
contest, launched in London, will award winning leaders $5m (£2.7m) over 10 
years when they leave office, plus $200,000 (£107,000) a year for life".
http://news.bbc.co.uk/1/hi/uk/6086088.stm

He wants to fight African corruption at government level, and many people 
are seeing his prize as a great step forward in development (for example 
http://oxblog.blogspot.com/2006/10/in-so-crazy-it-just-might-work-dept-uk.html). 
Bill Clinton and Kofi Annan have endorsed it. It seems like a lot of money, 
and it's a hell of a lot more than a paltry Nobel Peace Prize will get you, 
so it should work as a classic incentive, right?

Everything's relative. An incentive needs to be valuable to the person it 
targets. A Nobel Prize might not pay so much, but it's regarded as highly 
prestigious by many of its targets. They're probably home-owners, 
car-owners, and don't want for food on their plates. If anything, a Nobel 
Prize could be reduced in cash but not lose any of its value.

Is a prize of $5 million for good behaviour in African government likely to 
work? It has none of the prestige of a Nobel Prize yet, so its value as an 
incentive to its targets can only come from the cash itself.

One of its targets might be the corrupt Zairean president Mobutu Seko. Or 
Kenya's President Kibaki. Or former president Sani Abacha of Nigeria. They 
would see the glittering riches to be awarded at the end of their term of 
office, and for the rest of their life, and think "I must stay democratic 
and fight corruption to see this $5 million".

However Seko is famous for looting not five million dollars from Zaire but 
five *billion*. His incentive was a thousand times the incentive of Mo 
Ibrahim's prize. Abachi took $2.3 billion from Nigeria, and Kibaki's 
administration has lost $188 million.

Ibrahim's prize doesn't stand up at all against the real prizes available to 
these bandits. It has no cash value, and no prestige. Moreover, it's 
endorsed by Clinton and Kofi Annan, so it's hardly going to gain prestige 
outside the development circuit jet-setting between Geneva, New York and the 
third world. It amounts to another salve for the world's conscience along 
the lines of Live Aid.