11.3 C
Los Angeles
Friday, March 24, 2023
HomeCryptoCryptoeconomics :  Game Wrapping. Solving...

Cryptoeconomics :  Game Wrapping. Solving the Prisoner’s Dilemma

In the concept of supply and demand, the competition between market participants is a driving force to drive market events forward. Game theory is a well-established means of describing what is happening in the market environment. The non-cooperative game theory describes an environment with the absence of an external authority to enforce rules. Each player is basically on one ́s own. While this only partially applies to a real market economy because each economy has its legal regulations, a company still can cheat in nowadays often untransparent economical systems, as already laid out in the beginning of the thesis. Even though companies claim to behave in a correct manner, like Google ́s marketing slogan proclaimed “Don ́t be evil” [2000–2018], a smart contract blockchain ecosystem, like Ethereum, could be the proxy to accomplish a more transparent proclaim and force companies to a code of conduct which could be more like “Can’t be evil”.

Virgil Griffith, who is an American Scientist and Ethereum expert, describes the ability Ethereum could bring into such game-theoretical construct as game wrapping, meaning to create “transparent, triggerable, unstoppable burns and on-chain side-payments to move game-theoretic equilibria or to create new player actions. Game Warping stacks as a new layer atop an uncooperative game to make cooperation the Rational choice(Griffith, 2019).

In the following, this idea will be demonstrated based on the game theory problem of the Prisoner`s Dilemma. The following example is settled in an economic environment and connects to Griffith’s ideas:

There are two companies. One is the Alice LLC, and the other is the Bob LLC. Both are technology companies that put much of their money into research and development [R&D] of new products. Both companies have a one budget for marketing and one for R&D topics. There is an informal agreement between both companies on leaving their marketing budget relatively low to accelerate the development of new advantaged technologies. Nevertheless, if one of the companies did in- crease their marketing budget, this would lead to a higher sale of a product for that company com- pared to the other, which then could lead to a higher income because higher sales offset the in- creased marketing expenses. However, if also the other company, then decides to increase their marketing budget to hold up in competition, the increased marketing efforts may offset each other and prove ineffective due to the higher advertising expenses, ultimately reducing the company’s income while also lowing the R&D budget, which would be needed for more advantages in technology terms. Overall, this market situation flows in a bad outcome for each company as well as the innovation effectiveness of the market in general.

Prisoner‘s Dilemma Default Outcome

A Blockchain environment supports the companies in cooperating based on Griffith ́s idea. Imagine both companies interacting as DAOs and beforehand deposit 100M USD in a smart contract, with the smart contract anchored condition: If one DAO increases their marketing budget, the 10M USD will be destroyed (or locked to R&D only topics), which solves the dilemma, because the rational individual decision and the collective decision are now to cooperate:

Prisoner’s Dilemma with Smart Contract Penalty Adjustments
Prisoner‘s Dilemma Blockchain Outcome

This simplified example shows how Blockchain technology could possibly increase the capital efficiency of R&D in a comprehensive environment while also allowing the market economies to apply, while not adding an additional intermediate to the concept.

Furthermore, this is an awesome example how cryptoeconomics can actually help to improve our economic in general (even thought we are only looking on a very simplified example here). Driving market forces without any state control in a more humanistic optimal allocation is a huge advantages over our traditional system.

Source link

Most Popular


Please enter your comment!
Please enter your name here

More from Author

Ari Lennox Shares ‘Princess And The Frog’ Video Audition

Ari Lennox revealed her fans were heartbroken late last year age gender location tourism Will be her last. "I love my loyal fans so much and can't wait to give you my all every night!!" she wrote on social media. "Europe, I love you, but...

DefiLlama resolves internal conflict, quelling ‘hostile takeover’ accusations

Decentralized finance (DeFi) analytics platform DefiLlam has resolved an internal conflict that threatened to result in a “fork” of the platform. The issue was first raised by developer 0xngmi, who claimed on Twitter on March 19 that DefiLlama was "subject to a hostile takeover" for launching a token...

Sifflet raises cash to expand its data observability platform

Organizations working with large amounts of data often struggle to ensure that data remains high quality. According to a research from Great Expectations, which creates open source data testing tools, 77% of companies have data quality problems and 91% believe that this affects their performance. With this...

Matt Kuhnemann gets ‘awesome tips’ from Ravindra Jadeja

Ravindra Jadeja he is a man of his word. India allrounder promised Australia spinner Matt Kuhnemann masterclass after the Border-Gavaskar series - and he did just that.Soon Fourth exam in Ahmedabad ended in a draw on Monday, Jadeja took time to speak to the Australian visitor....

At Ukraine’s front, police try to evacuate holdout families

AVDIIVKA, Ukraine -- Pale and grimy from living in a damp, dark basement for nearly a year, the crying teenager and her mother emerged to the sound of pounding artillery and made their way to a waiting armored police van that took them into salvationRussian forces were...

Rabbit Hole Cast Had No Idea About The Show’s Twists Until The Very End [Exclusive]

Meta Golding also came as a bit of a surprise to co-star as Hayley Winton in the series alongside Kiefer Sutherland. she told me: "When I first got the script, I think I had two episodes. At that point, I didn't even understand if she was good or...

Will Amazon Or Apple TV + Offer The Pac-12 Deal They Can’t Say No To?

By Jim Williams If we're to believe what we're reading in the trade press, the new Pac-12 media deal with ESPN, Amazon Prime Video, and Apple TV+ remains on the table. What we've been reading in the tea leaves is that potential conversations are heavy on distribution...

Abdur Rehman to be Pakistan’s head coach for Afghanistan T20Is; Umar Gul named bowling coach

Pakistan mentioned Abdur Rehman as a long-time principal and Umar Gul as the bowling coach for the three T20I matches against Afghanistan. Mohammad Yousuf and Abdul Majeed will continue as batting coach and player, respectively.Rehman is an experienced homework trainer with more than ten years of experience...

Ari Lennox Celebrates Sobriety With Splits In A Sexy Dress

go through Kay Lewis Posted on March 21, 2023 1:00 amAli Lennox released a series of Behind-the-scenes A picture was taken before she hit the stage, and they were kind of spooky. Ari Lennox Bling The singer wore what appeared to be gold coins, held together...

Arbitrum token finds its way to OTC market before the airdrop

The Arbitrum community has been speculating and selling its unissued ARB tokens in the over-the-counter (OTC) markets following Arbitrum's announcement. Arbitrum Foundation announced that ARB, Arbritrum's new token, will be released to eligible community members on Thursday, March 23rd. It was explained that ARB Marks Arbitrum's...