In his Stanford Entrepreneurs talk, Peter Diamandis briefly mentioned the idea of "Mega-Prizes". There's a line of thought that holds that the benefits of prizes wane at a certain point because the larger dollar amount implies a more difficult challenge that's beyond the reach of small entrepreneurial teams, and large corporations are not as interested in investing the efforts of large groups on such difficult challenges. There's another line of thought that says that's nonsense. Personally my guess is that there's a lot of truth to the skeptical perspective, and I'd probably be inclined if I were making prizes to stick with many smaller ones and see how that works out.
Anyway, Peter Diamandis had (or at least was scheduled for) a talk at the Pioneer Institute in November 2007 on mega-prizes:
Can mega-prizes inspire better solutions to social and political problems than governments? Dr. Peter Diamandis, founder and CEO of the XPRIZE Foundation, thinks so. An MIT PhD and Harvard MD, he created the XPRIZE in 1995 to inspire radical innovations to benefit humanity. With $10 million in private funding, the first XPRIZE was awarded to a team led by Microsoft cofounder Paul Allen and aviation pioneer Bert Rutan, who launched SpaceShipOne to the edge of space twice in two weeks in 2004. Dr. Diamandis will deliver the 2007 Lovett C. Peters Lecture, offering his thoughts on how mega-prizes can help solve seemingly intractable problems. We in Massachusetts have our share of such problems. Could an XPRIZE or two help? *Invitation Only*
Medical Hypotheses - a blog from the editor of a journal of the same name, that has a post/paper/editorial on "Mega-cash prizes for revolutionary science". The recommendation to provide incentives for revolutionary science, which otherwise may be rejected as a career path in favor of high-volume incremental science because of the difficulty and risk of failure:
We suggest that mega-cash prizes (measured in tens of millions of dollars) are a suitable reward for those individuals (or institutions) whose work has triggered radically new directions in science.
Medical Hypotheses also has another editorial in academic paper form in response to the first recommendation. This response points out that smaller prizes have also been shown to be effective. The history of bigger prizes is also reviewed. Mega-prizes are thought to be beneficial, but some drawbacks are noted, such as the necessity to "climb the whole mountain" instead of taking steps - so perhaps partial credit might need to be awarded.