scholarly journals Transaction Fees, Block Size Limit, and Auctions in Bitcoin

Ledger ◽  
2019 ◽  
Vol 4 ◽  
Author(s):  
Nicola Dimitri
Keyword(s):  
Nash Equilibrium ◽  
Block Size ◽  
Complete Information ◽  
Revenue Maximization ◽  
Equilibrium Outcome ◽  
Trade Off ◽  
Size Limit ◽  
Block Space ◽  
Transaction Fees ◽  
Auction Game

Confirmation of Bitcoin transactions is executed in blocks, which are then stored in the Blockchain. As compared to the number of transactions in the mempool, the set of transactions which are verified but not yet confirmed, available space for inclusion in a block is typically limited. For this reason, successful miners can only process a subset of such transactions, and users compete with each other to enter the next block by offering confirmation fees. Assuming that successful miners pursue revenue maximization, they will include in the block those mempool transactions that maximize earnings from related fees. In the paper we model transaction fees as a Nash Equilibrium outcome of an auction game with complete information. In the game the successful miner acts as an auctioneer selling block space, and users bid for shares of such space to confirm their transactions. Moreover, based on expected fees we also discuss what the optimal, revenue maximizing, block size limit should be for the successful miner. Consistently with the intuition, the optimal block size limit resolves the trade-off between including additional transactions (which possibly lower the unit fees collected) and keeping the block capacity limited (with, however, higher unit fees).

scholarly journals Efficiency and Equilibrium in Network Games: An Experiment

2021 ◽  
pp. 1-44
Author(s):  
Edoardo Gallo ◽  
Chang Yan
Keyword(s):  
Nash Equilibrium ◽  
Network Structure ◽  
Economic Systems ◽  
Central Feature ◽  
Network Games ◽  
Trade Off ◽  
Network Game ◽  
Asymmetric Networks ◽  
Unique Nash Equilibrium

Abstract The tension between efficiency and equilibrium is a central feature of economic systems. We examine this trade-off in a network game with a unique Nash equilibrium in which agents can achieve a higher payoff by following a “collaborative norm”. Subjects establish and maintain a collaborative norm in the circle, but the norm weakens with the introduction of one hub connected to everyone in the wheel. In complex and asymmetric networks of 15 and 21 nodes, the norm disappears and subjects’ play converges to Nash. We provide evidence that subjects base their decisions on their degree, rather than the overall network structure.

scholarly journals A Simple and Approximately Optimal Mechanism for a Buyer with Complements

2020 ◽  
Author(s):  
Alon Eden ◽  
Michal Feldman ◽  
Ophir Friedler ◽  
Inbal Talgam-Cohen ◽  
S. Matthew Weinberg
Keyword(s):  
Real World ◽  
Recent Literature ◽  
Revenue Maximization ◽  
Trade Off ◽  
Optimal Mechanism

Recent literature on approximately optimal revenue maximization has shown that in settings where agent valuations for items are complement free, the better of selling the items separately and bundling them together guarantees a constant fraction of the optimal revenue. However, most real-world settings involve some degree of complementarity among items. The role that complementarity plays in the trade-off of simplicity versus optimality has been an obvious missing piece of the puzzle. In “A Simple and Approximately Optimal Mechanism for a Buyer with Complements,” the authors show that the same simple selling mechanism—the better of selling separately and as a grand bundle—guarantees a $\Theta(d)$ fraction of the optimal revenue, where $d$ is a measure of the degree of complementarity. One key modeling contribution is a tractable notion of “degree of complementarity” that admits meaningful results and insights—they demonstrate that previous definitions fall short in this regard.

Flexibility mechanisms and credit discounting

2003 ◽  
Vol 8 (2) ◽  
pp. 247-260 ◽  
Author(s):  
Sungwhee Shin ◽  
Sang-Chul Suh
Keyword(s):  
Climate Change ◽  
Game Theory ◽  
Nash Equilibrium ◽  
Kyoto Protocol ◽  
Cooperative Game ◽  
Cooperative Game Theory ◽  
International Treaties ◽  
Equilibrium Outcome

We consider the international treaties on climate change as self-enforcing agreements. Applying non-cooperative game theory, we interpret the UN framework Convention on Climate Change as a Nash equilibrium outcome of an international abatement game where only domestic abatement is allowed. The Kyoto Protocol is a Nash equilibrium outcome of the game where flexibility mechanisms are introduced. We also show that credit discounting on foreign abatement can Pareto improve the welfare of all countries.

scholarly journals Non-decreasing Payment Rules for Combinatorial Auctions

2018 ◽  
Author(s):  
Vitor Bosshard ◽  
Ye Wang ◽  
Sven Seuken
Keyword(s):  
Nash Equilibrium ◽  
Nash Equilibria ◽  
State Of The Art ◽  
Combinatorial Auctions ◽  
Desirable Property ◽  
Limited Success ◽  
Multiple Orders ◽  
Auction Game

Combinatorial auctions are used to allocate resources in domains where bidders have complex preferences over bundles of goods. However, the behavior of bidders under different payment rules is not well understood, and there has been limited success in finding Bayes-Nash equilibria of such auctions due to the computational difficulties involved. In this paper, we introduce non-decreasing payment rules. Under such a rule, the payment of a bidder cannot decrease when he increases his bid, which is a natural and desirable property. VCG-nearest, the payment rule most commonly used in practice, violates this property and can thus be manipulated in surprising ways. In contrast, we show that many other payment rules are non-decreasing. We also show that a non-decreasing payment rule imposes a structure on the auction game that enables us to search for an approximate Bayes-Nash equilibrium much more efficiently than in the general case. Finally, we introduce the utility planes BNE algorithm, which exploits this structure and outperforms a state-of-the-art algorithm by multiple orders of magnitude.

Research of Railway Capacity Strengthening Scheme Decision Method Based on Game Theory

2014 ◽  
Vol 505-506 ◽  
pp. 571-576
Author(s):  
Xiang Xu ◽  
Xing Chen Zhang ◽  
Bin Xu
Keyword(s):  
Game Theory ◽  
Nash Equilibrium ◽  
Optimization Model ◽  
Complete Information ◽  
Evaluation Index ◽  
Capacity Strengthening ◽  
Static Game ◽  
Decision Method ◽  
Railway Capacity

Firstly, established the optimization model based on complete information static game theory, which see evaluation index as the participants of a game, capacity strengthening strategies as the strategies of participants, and the strategies contained in the Nash equilibrium of the game as the first step optimization results. Then structure an algorithm to secondary selection, which makes there is only one strategy in the final result. At last given a case study combined with Baoshen railway capacity strengthening scheme decision. The result indicated that the model has good applicability, and can reduce the subjective error effectively.

Analysis of Combined Activity in Collaborative Information Seeking Based on Game Theory

2013 ◽  
Vol 850-851 ◽  
pp. 1044-1047
Author(s):  
Hai Dong Yu
Keyword(s):  
Game Theory ◽  
Nash Equilibrium ◽  
Equilibrium Model ◽  
Information Seeking ◽  
Complete Information ◽  
Compensation Policy ◽  
Bayesian Nash Equilibrium ◽  
Work Tasks ◽  
Collaborative Information Seeking ◽  
The Stability

The paper studied the game strategy decisions of alliance leader and members in collaborative information seeking. Based on basic Nash equilibrium model with complete information, it researched Bayesian-Nash equilibrium under incomplete information condition which further implied that the incompleteness of information had effected on the alliance leader’s compensation policy. Furthermore, it revealed a methodology to analyze the stability of Bayesian-Nash equilibrium and gave a detailed algorithm. It provided a framework to systematically explore the relationships between alliance leader and other members while solving work tasks in collaboration.

Sequential Auctions with Multi-Unit Demands

2009 ◽  
Vol 9 (1) ◽  
Author(s):  
Gustavo E Rodriguez
Keyword(s):  
Complete Information ◽  
Sequential Auctions ◽  
Equilibrium Outcome ◽  
Marginal Values ◽  
Second Price Auctions

I study sequential second price auctions with multi-unit demands in a complete information setting, focusing on cases in which payoffs are non-separable as a consequence of decreasing marginal values. At the equilibrium outcome a buyer behaves as a monopsonist with respect to the residual supply, which raises the possibility of inefficiency. Moreover, I construct an equilibrium that exhibits declining prices, a fact that has been empirically observed.

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