In brief, I agree that as proposed the mechanism isn’t exactly a K. beauty contest. But to the extent that OMB’s short list choices are “informed by the crowd’s aggregate choice,” then the process takes on a K. beauty contest aspect.

A more complete response is, as noted, in the comments at Midas Oracle.

In our design, the bettors would be betting on what the OMB advisers would decide to put on the short list, presumably according to the particular intrinsic and perceived merits of each idea in regard to pre-specified requirements (listed on the SAVE Award home page). A bettor’s task in this case is to divine the ultimate selection of the advisers, not the preference of other bettors. The ranking produced by the betting – quickly and efficiently – just serves to inform the decision makers and make their selection task easier.

In the Private sector, this design works beautifully. There’s no reason why it would not work for the Administration as well.