[slv77]

Small bounties may not be extremely effective at getting expensive people to work for peanuts but they are very effective at destroying the underground economy where these bugs used to be shared, traded or sold.

Since there is no honor among thieves every buyer has to assume that any bug they buy will also be sold to other buyers. With even a moderate bug bounty in place it becomes a prisoners dilemma for all parties who know of the bug. The first person to disclose the bug captures the bounty and the remaining parties get shut out.

Since everyone in the market has to assume that everyone else is cheating the market collapses. Microsoft has a paper on the economic incentives of the underground economy that covers the topic nicely:

https://www.microsoft.com/en-us/research/publication/nobody-...