This strategy (although certainly better-intentioned) failed for the same reason your proposal would fail.
What’s the similarity here? I’m not entirely sure a fairy tale disproves OPs argument, particularly when the circumstances are so different (you can’t bring in bugs from another app, facebook has a history of paying up and the bounty fees are tiny for them).
To some extent this dynamic must already exist, which is a troubling thought.
I've not seen any evidence for this behaviour existing, even with Microsoft Bug Bounties of up to $250,000, or even heard of developers being tempted to introduce bugs for friends to find them.
I assume the bigger risk is developers intentionally introduce bugs for nefarious purposes (i.e. black market sale), rather than to win a bug bounty.
I don't get this. What's wrong with incentevizing bounty hunting? Isn't the whole point of bounties to provide an incentive to the public to find & report bugs?
Personally, if I found a bug that had a market, it's going to the highest (legal) bidder. Be it Mossad, Facebook or Mr. Bone Saw's personal security team. Bug hunting is a professional service not a humanitarian one.