Blockchain Papers

Simon Loertscher, Leslie M. Marx

No abstract is available for this record.

Ingrid Bauer, José Parra-Moyano, Karl Schmedders, Gerhard Schwabe

Markets in which similar goods of different qualities are sold suffer from information asymmetries and their negative consequences. Dealers have established themselves, and mediate these markets through their use of quality signals. While these signals help to mitigate information asymmetries, these markets still function well below their optimum: a large share of goods sold are overpriced, and most of the benefits are reaped by intermediaries. In this paper we build on prior research that proposes the use of blockchain as an enabler for trusted, decentralized asset documentation. Applying a socio-technical lens, we describe how blockchain-enabled multi-party certification affords dealers the action potential to send signals that are more closely correlated to the unobservable quality of the underlying good (i.e., signals with a higher fit) than the signals they send today. We then both theorize and experimentally explore the market effects of the two types of signals. Using data from a laboratory market experiment with 210 participants, we find empirical evidence that multi-party certification affords dealers the action potential to send signals of significantly higher fit than those sent by intermediaries alone, leading to a reduction in information asymmetries, a more efficient allocation of goods, and an increase in market fairness.

Ioannis Caragiannis, Nikolaj I. Schwartzbach

We study a scenario where an adjudication task (e.g., the resolution of a binary dispute) is outsourced to a set of agents who are appointed as jurors. This scenario is particularly relevant in a Web3 environment, where no verification of the adjudication outcome is possible, and the appointed agents are, in principle, indifferent to the final verdict. We consider simple adjudication mechanisms that use (1) majority voting to decide the final verdict and (2) a payment function to reward the agents with the majority vote and possibly punish the ones in the minority. Agents interact with such a mechanism strategically: they exert some effort to understand how to properly judge the dispute and cast a yes/no vote that depends on this understanding and on information they have about the rest of the votes. Eventually, they vote so that their utility (i.e., their payment from the mechanism minus the cost due to their effort) is maximized. Under reasonable assumptions about how an agent's effort is related to her understanding of the dispute, we show that appropriate payment functions can be used to recover the correct adjudication outcome with high probability. Our findings follow from a detailed analysis of the induced strategic game and make use of both theoretical arguments and simulation experiments.

Xue Tan, Yong Tan

No abstract is available for this record.

Xiaotong Sun, Xi Chen, Charalampos Stasinakis, Georgios Sermpinis

Decentralized Autonomous Organization (DAO) provides a decentralized governance solution through blockchain, where decision-making process relies on on-chain voting and follows majority rule. This paper focuses on MakerDAO, and we find three voter coalitions after applying clustering algorithm to voting history. The emergence of a dominant voter coalition is a signal of governance centralization in DAO, and voter coalitions have complicated influence on Maker protocol, which is governed by MakerDAO. This paper presents empirical evidence of multicoalition democracy in DAO and further contributes to the contemporary debate on whether decentralized governance is possible.

Nadine Ostern, Friedrich Holotiuk, Jürgen Moormann

Organizations face manifold implementation barriers in blockchain adoption. Of particular interest is the pre-adoption phase, where knowledge and attitudes guide organizations’ approaches toward a new technology. This paper examines organizations’ approaches to blockchain through a sensemaking lens to identify how blockchain prototype development is guided by perceived business value of and sentiments toward the technology. Taking a critical realist perspective, we examine divergences between organizations’ approaches toward blockchain adoption, i.e., what they do, and why and how they approach blockchain. We differentiate between four types of approaches and provide recommendations how the pre-adoption phase can be considered in academic analyses.

Alexander Braun, Niklas Häusle, Stephan Karpischek

No abstract is available for this record.

Moran Cerf, Sandra Matz, Aviram Berg

Human decision making is often prone to biases and irrationality. Group decisions add dynamic interactions that further complicate the choice process and frequently result in outcomes that are suboptimal for both the individual and the collective. We show that an implementation of a Blockchain protocol improves individuals’ decision strategies and increases the alignment between desires and outcomes. The Blockchain protocol affords (1) a distributed decision, (2) the ability to iterate repeatedly over a choice, (3) the use of feedback and corrective inputs, and (4) the quantification of intrinsic choice attributes (i.e., greed, desire for fairness, etc.). We test our protocol’s performance in the context of the Public Goods Game. The game, a generalized version of the Prisoner’s Dilemma, allows players to maximize their own gain or act in ways that benefit the collective. Empirical evidence shows that participants’ cooperation in the game typically decreases once a single player favors their own interest at the expense of others’. In our Blockchain implementation, “smart contracts” are used to safeguard individuals against losses and, consequently, encourage contributions to the public good. Across different tested simulations, the Blockchain protocol increases both the overall trust among the participants and their profits. Agents decision strategies remain flexible while they act as each other’s source of accountability (which can be seen as formalized distributed “Ulysses contract”). To highlight the contribution of our protocol to society at large we incorporated an entity that represents the public good. This benevolent independent beneficiary of the contributions of all participants (e.g. a charity organization or a tax system) maximized its payoffs when the Blockchain protocol was implemented. We provide a formalized implementation of the Blockchain protocol and discuss potential applications that could benefit society by more accurately capturing individuals’ preferences. For example, the protocol could help maximize profits in groups, facilitate democratic election that better reflect the public opinion, or enable group decision in circumstances where a balance between anonymity, diverse opinions, personal preferences and loss-aversion play a role.

Vitalik Buterin, Zoë Hitzig, E. Glen Weyl

We propose a design for philanthropic or publicly funded seeding to allow (near) optimal provision of a decentralized, self-organizing ecosystem of public goods. The concept extends ideas from quadratic voting to a funding mechanism for endogenous community formation. Citizens make contributions to public goods of value to them. The amount received by the public good is (proportional to) the square of the sum of the square roots of contributions received. Under the “standard model,” this mechanism yields first best public goods provision. Variations can limit the cost, help protect against collusion, and aid coordination. We discuss applications to campaign finance and highlight directions for future analysis and experimentation. This paper was accepted by Joshua Gans, business strategy.

Denise J. Wilkins, Bashar Nuseibeh, Mark Levine

No abstract is available for this record.

Vitalik Buterin, Zoë Hitzig, E. Glen Weyl

We propose a design for philanthropic or publicly-funded seeding to allow (near) optimal provision of a decentralized, self-organizing ecosystem of public goods. The concept extends ideas from Quadratic Voting to a funding mechanism for endogenous community formation. Individuals make public goods contributions to projects of value to them. The amount received by the project is (proportional to) the square of the sum of the square roots of contributions received. Under the standard model this yields first best public goods provision. Variations can limit the cost, help protect against collusion and aid coordination. We discuss applications to campaign finance, open source software ecosystems, news media finance and urban public projects. More broadly, we offer a resolution to the classic liberal-communitarian debate in political philosophy by providing neutral and non-authoritarian rules that nonetheless support collective organization.

Aleksander Berentsen, Guillaume Rocheteau

No abstract is available for this record.

Geoffrey B. Sprinkle

This paper reports the results of an experiment that examines how incentive-based compensation contracts compare to flat-wage compensation contracts in motivating individual learning and performance. I use a multiperiod cognitive task where the accounting system generates information (feedback) that has both a contracting role and a belief-revision role. The results suggest that incentives enhance performance and the rate of improvement in performance by increasing both: (1) the amount of time participants devoted to the task, and (2) participants' analysis and use of information. Further, I find evidence that incentives improve performance only after considerable feedback and experience, which may help explain why many prior one-shot decision-making experiments show no incentive effects. Collectively, the results suggest that incentives induce individuals to work longer and smarter, thereby increasing the likelihood that they will develop and use the innovative strategies frequently required to perform well in complex judgment tasks and learning situations.