Template-Type: ReDIF-Paper 1.0
Author-Name: Jens Gudmundsson
Author-Name-First: Jens
Author-Name-Last: Gudmundsson
Author-Email: jg@ifro.ku.dk
Author-Workplace-Name: Department of Food and Resource Economics, University of Copenhagen
Author-Name: Jens Leth Hougaard
Author-Name-First: Jens Leth
Author-Name-Last: Hougaard
Author-Email: jlh@ifro.ku.dk
Author-Workplace-Name: Department of Food and Resource Economics, University of Copenhagen
Author-Name: Chiu Yu Ko
Author-Name-First: Chiu Yu
Author-Name-Last: Ko
Author-Email: chiuyuko@cuhk.edu.hk
Author-Workplace-Name: Department of Decision Science and Managerial Economics, Chinese University of Hong Kong
Title: Sharing sequentially triggered losses: Automatic conflict resolution through smart contracts
Abstract: When actions by one agent force another to deviate from their agreements with a third, "victim" turns into "injurer" in the chain's subsequent steps. Should the chain's initiator be responsible only for the direct harm they cause or also bear some of the indirect losses they trigger? Through an axiomatic approach, we characterize the class of fixed-fraction rules, which strike a balance between incentives for accident prevention on the one hand and fairness in terms of how liabilities are assigned on the other. Their simple design make the rules ideal for practical implementation through smart contracts, enabling automated conflict resolution.
Length: 28 pages
Creation-Date: 2022-12
File-URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2020/IFRO_WP_2020_05_rev_2.pdf
File-Format: Application/pdf
Number: 2020/05
Classification-JEL: K12, C7, D6
Keywords: Sequential losses, Fair allocation, Smart contracts, Cost allocation
Handle: RePEc:foi:wpaper:2020_05_rev_2