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: jlh21@nyu.edu
Author-Email: jlh@ifro.ku.dk
Author-Workplace-Name: NYU-Shanghai, China
Author-Workplace-Name: Department of Food and Resource Economics, University of Copenhagen
Title: Enabling reciprocity through blockchain design
Abstract: We introduce a reciprocity protocol, an innovative approach to coordinating and sharing rewards in blockchains. Inherently decentralized and easy to implement, it puts emphasis on incentives rather than forcing specic sharing rules from the outset. Analyzing the non-cooperative game the protocol induces, we identify a robust, strict, and Pareto-dominant symmetric equilibrium. In it, even self-centered participants show extensive reciprocity to one another. Thus, despite a setting that is generally unfavorable to reciprocal behavior, the protocol manages to build trust between the users by taking on a role akin to a social contract.
Length: 28 pages
Creation-Date: 2020-12
Revision-Date: 2021-02-09
File-URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2020/IFRO_WP_2020_14.pdf
File-Format: Application/pdf
Number: 2020/14
Classification-JEL: C62, C72, D02, D63, D91
Keywords: Blockchain, reciprocity, protocol design, Nash equilibrium
Handle: RePEc:foi:wpaper:2020_14