Why Bitcoin Will Fail to Scale?

2022 ◽  
Author(s):  
Nikhil Malik ◽  
Manmohan Aseri ◽  
Param Vir Singh ◽  
Kannan Srinivasan
Keyword(s):  
Lower Bound ◽  
Theoretic Model ◽  
Security Risk ◽  
Single Chain ◽  
Rent Extraction ◽  
Outside Options ◽  
Partial Filling ◽  
Game Theoretic ◽  
Game Theoretic Model ◽  
The One

Bitcoin falls dramatically short of the scale provided by banks for payments. Currently, its ledger grows by the addition of blocks of ∼2,000 transactions every 10 minutes. Intuitively, one would expect that increasing the block capacity would solve this scaling problem. However, we show that increasing the block capacity would be futile. We analyze strategic interactions of miners, who are heterogeneous in their power over block addition, and users, who are heterogeneous in the value of their transactions, using a game-theoretic model. We show that a capacity increase can facilitate large miners to tacitly collude—artificially reversing back the capacity via strategically adding partially filled blocks in order to extract economic rents. This strategic partial filling crowds out low-value payments. Collusion is sustained if the smallest colluding miner has a share of block addition power above a lower bound. We provide empirical evidence of such strategic partial filling of blocks by large miners of Bitcoin. We show that a protocol design intervention can breach the lower bound and eliminate collusion. However, this also makes the system less secure. On the one hand, collusion crowds out low-value payments; on the other hand, if collusion is suppressed, security threatens high-value payments. As a result, it is untenable to include a range of payments with vastly different outside options, willingness to bear security risk, and delay onto a single chain. Thus, we show economic limits to the scalability of Bitcoin. Under these economic limits, collusive rent extraction acts as an effective mechanism to invest in platform security and build responsiveness to demand shocks. These traits are otherwise hard to attain in a disintermediated setting owing to the high cost of consensus. This paper was accepted by Kartik Hosanagar, information systems.

Toward An Econometric Model of Guzman'S Theory of Customary International Law

2011 ◽  
Vol 56 (2) ◽  
pp. 98-107
Author(s):  
Ryan Luby
Keyword(s):  
United States ◽  
International Law ◽  
Econometric Model ◽  
The United States ◽  
Theoretic Model ◽  
Diverse Group ◽  
Customary International Law ◽  
Game Theoretic ◽  
Game Theoretic Model ◽  
The One

The United States' recent incursions into both Iraq and Afghanistan have resituated debates concerning the validity and effectiveness of customary international law (CIL). On the one hand, scholars such as Goldsmith and Bradley argue that CIL is neither valid nor effective. Recently, Guzman formulated a response to such arguments as those proposed by Goldsmith and Bradley (1997). In a lucid critique of Goldsmith's argument, Guzman categorizes such arguments as “doctrinal” (2006). Instead, Guzman proposes a game theoretic model that seeks to quantify “reputation” in order to ascertain a given norm's status as CIL. The following paper proposes an econometric model in order to operationalize Guzman's theory of CIL. Indeed, looking at a politically and economically diverse group of five countries between the years of 1960 and 2008, the analysis herein suggests a more nuanced conception of CIL than the absolutist position of Goldsmith.

Politics at the Water's Edge: Parties, Voters, and the Use of Force Abroad

1998 ◽  
Vol 52 (2) ◽  
pp. 307-324 ◽  
Author(s):  
Joanne Gowa
Keyword(s):  
Political Parties ◽  
Use Of Force ◽  
Subgame Perfect Equilibrium ◽  
Repeated Game ◽  
Partisan Politics ◽  
Theoretic Model ◽  
Equilibrium Outcome ◽  
Game Theoretic ◽  
Game Theoretic Model ◽  
The One

This article examines the effects of party politics and presidential election cycles on U.S. recourse to force abroad. I analyze a game-theoretic model to generate predictions about these effects. In the unique time-consistent equilibrium outcome of the one-shot game, policy varies across political parties. In a subgame–perfect equilibrium outcome of the repeated game, the use of force is invariant to the partisan composition of government. In neither case does policy respond to the electoral cycle.An empirical analysis supports the predictions of the repeated game. Between 1870 and 1992, U.S. recourse to force abroad responds neither to partisan politics nor to the domestic political calendar. It responds only to changes in U.S. power status and to the advent of general wars.

scholarly journals Partner choice creates fairness in humans

2015 ◽  
Vol 282 (1808) ◽  
pp. 20150392 ◽  
Author(s):  
Stéphane Debove ◽  
Jean-Baptiste André ◽  
Nicolas Baumard
Keyword(s):  
Evolutionary History ◽  
Partner Choice ◽  
Theoretic Model ◽  
Agent Based ◽  
Outside Options ◽  
Behavioural Experiment ◽  
Agent Based Simulations ◽  
Game Theoretic ◽  
Game Theoretic Model

Many studies demonstrate that partner choice has played an important role in the evolution of human cooperation, but little work has tested its impact on the evolution of human fairness. In experiments involving divisions of money, people become either over-generous or over-selfish when they are in competition to be chosen as cooperative partners. Hence, it is difficult to see how partner choice could result in the evolution of fair, equal divisions. Here, we show that this puzzle can be solved if we consider the outside options on which partner choice operates. We conduct a behavioural experiment, run agent-based simulations and analyse a game-theoretic model to understand how outside options affect partner choice and fairness. All support the conclusion that partner choice leads to fairness only when individuals have equal outside options. We discuss how this condition has been met in our evolutionary history, and the implications of these findings for our understanding of other aspects of fairness less specific than preferences for equal divisions of resources.

Stability in the informal value transfer systems: norms of trust or institutions of control?

2017 ◽  
pp. 120-130
Author(s):  
A. Lyasko
Keyword(s):  
Social Control ◽  
Institutional Economics ◽  
Theoretic Model ◽  
Transfer System ◽  
Value Transfer ◽  
Partner Interaction ◽  
Game Theoretic ◽  
Game Theoretic Model ◽  
Informal Value Transfer System

Informal financial operations exist in the shadow of official regulation and cannot be protected by the formal legal instruments, therefore raising concerns about the enforcement of obligations taken by their participants. This paper analyzes two alternative types of auxiliary institutions, which can coordinate expectations of the members of informal value transfer systems, namely attitudes of trust and norms of social control. It offers some preliminary approaches to creating a game-theoretic model of partner interaction in the informal value transfer system. It also sheds light on the perspectives of further studies in this area of institutional economics.

Hollywood’s Movie Production Companies in Game Theoretic Model

2020 ◽  
Author(s):  
Nargiz Mammadova ◽  
Aygun Malikova ◽  
Arzu Heydarova
Keyword(s):  
Theoretic Model ◽  
Game Theoretic ◽  
Game Theoretic Model

Augmenting Employees’ Efforts in Innovation

2021 ◽  
pp. 097674792198917
Author(s):  
Nikita Jain
Keyword(s):  
Theoretic Model ◽  
Wrongful Discharge ◽  
Equilibrium Level ◽  
Game Theoretic ◽  
Game Theoretic Model ◽  
The Impact

Strong labour laws play a major role in motivating innovation among employees. It has been found in the literature that stringency of labour laws is positively linked with employees’ efforts in innovation, in particular, wrongful discharge laws (WDL). However, employees may also bring nuisance suits against employers. Usually, the result of these suits is that both parties settle with each other. Thus, even if employees are justly dismissed, they may be able to bring nuisance suits against employers and gain a settlement amount. This article investigates how the possibility of nuisance suits affects the impact of WDL on employees’ efforts in innovation. In this respect, a game-theoretic model is developed in the article to find the equilibrium level of employees’ efforts in the presence of nuisance suits, where there is a possibility of employees getting discharged from the firm. I find that if nuisance suits are a possibility, the stringency of WDL has no impact on employees’ efforts if defence cost of the firm is low; but for higher defence costs, WDL affects employees’ efforts. The efforts exerted by an employee are found to be weakly increasing in the defence costs of the firm.

scholarly journals Formalization and study of the game-theoretic model of the optimal distribution of workers in enterprises

2019 ◽  
Vol 1399 ◽  
pp. 033095
Author(s):  
Irina Zaitseva ◽  
Tatiana Svechinskaya ◽  
Vladimir Zakharov ◽  
Natalia Zakharova ◽  
Andrey Murashko
Keyword(s):  
Theoretic Model ◽  
Optimal Distribution ◽  
Game Theoretic ◽  
Game Theoretic Model
Sign in / Sign up

Export Citation Format

Share Document