In a typical decentralized autonomous organization (DAO), people organize themselves into a group that is programmatically managed. DAOs can act as bidders in auctions, with a DAO's bid treated by the auctioneer as if it had been submitted by an individual, without regard to the internal structure of the DAO. We study auctions in which the bidders are DAOs. More precisely, we consider the design of two-level auctions in which the "participants" are groups of bidders rather than individuals. Bidders form DAOs to pool resources, but must then also negotiate the terms by which the DAO's winnings are shared. We model the outcome of a DAO's negotiations by an aggregation function (which aggregates DAO members' bids into a single group bid), and a budget-balanced cost-sharing mechanism (that determines DAO members' access to the DAO's allocation and distributes the total payment demanded from the DAO to its members). We pursue two-level mechanisms that are incentive-compatible (with truthful bidding a dominant strategy for members of each DAO) and approximately welfare-optimal. We prove that, even in the case of a single-item auction, incentive-compatible welfare maximization is not possible: No matter what the outer mechanism and the cost-sharing mechanisms used by DAOs, the welfare of the resulting two-level mechanism can be a $\approx \ln n$ factor less than optimal. We complement this lower bound with a natural two-level mechanism that achieves a matching approximate welfare guarantee. Our upper bound also extends to multi-item auctions where individuals have additive valuations. Finally, we show that our positive results cannot be extended much further: Even in multi-item settings with unit-demand bidders, truthful two-level mechanisms form a highly restricted class and as a consequence cannot guarantee any non-trivial approximation of the maximum social welfare.
Darcy W E Allen, Chris Berg, Aaron M. Lane, Trent MacDonald · 5 authors
Abstract Blockchains have enabled innovation in distributed economic institutions, such as money (e.g., cryptocurrencies) and markets (e.g., decentralised exchanges), but also innovations in distributed governance, such as decentralised autonomous organisations. These innovations have generated academic interest in studying web3 governance, but as yet there is no general theory of web3 governance. In this paper, we draw on the contrast between a ‘romantic view’ of governance (characterised by consensus through community voting) and the ‘exchange view’ of governance from public choice theory (characterised by an entrepreneurial process of bargaining and exchange of voters under uncertainty). Our analysis is the first to argue that the latter ‘exchange view’ of governance is best to understand the dynamics of governance innovation in web3, providing the foundations for a new general theory of governance in this frontier field. We apply the ‘exchange view’ of governance to three case studies (Curve, Lido and Metagov), exploring how these projects enable pseudonymous, composable and permissionless governance processes to reveal value. Our approach helps illuminate how this emergent polycentric governance process can generate robustness in decentralised systems.
Blockchain technology has facilitated the emergence of a new type of organizational form, Decentralized Autonomous Organizations (DAOs). In contrast to corporations and other types of business organizations, DAOs do not have managers or directors with formal decision rights. Instead, the members of DAOs collectively make decisions by voting on proposals. The governance process is encoded and executed via a smart contract, negating the need for centralized leadership. We examine the control of DAOs by analyzing 10,639 proposals across 151 DAOs. We find that, rather than democratizing decision-making, a small number, often three or fewer, of entities exert control over most decisions.
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.
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.
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.
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.
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.
Bruno Biais, Christophe Bisière, Matthieu Bouvard, Catherine Casamatta
Blockchains are distributed ledgers. Their protocol aims at ensuring that the miners in charge of recording transactions reach a consensus about a unique ledger. In this paper, we highlight that the game induced by the blockchain proof-of-work protocol generates several equilibria. In some equilibria, different versions of the ledger or “branches” coexist, breaching consensus. Such forks arise because of the interplay of miners' incentives to coordinate on the same branch, and miners' incentives to protect their vested interests on a given branch. We illustrate that these elements were present in the recent hard forks that occurred on Bitcoin.
The purpose of this paper is to show how the mechanism of the reward structure for cryptocurrency mining (known as “Proof of Work†) is applicable to alleviation of the free rider problem for voluntary public goods provision. This paper presents the following results. First, if each individual reports preferences honestly, then the Samuelson condition can hold. It is possible to set an appropriate level of mining. Second, if the scheme (mechanism) offered by our manuscript is introduced, public goods can theoretically be provided at a Pareto optimal level under certain conditions because each rational individual reports true preferences to the government.
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.
West Africa is home to myriad small and large-scale societies with non-centralized political systems. While a substantial ethnographic record describes the intricate balances of power and authority in such systems, their developmental trajectories are largely unknown owing to the lack of historical documentation and archaeological investigation. Given this gap in historical context, a great many assumptions and doubts exist in regards to the utility of the region’s ethnographic observations to world-wide archaeological and anthropological models. In this book I explore the long-term developmental trajectory of an ancient community (Kirikongo (Figure 1.1)) ancestral to the modern Bwa, who inhabit remarkably complex autonomous villages with extensive social differentiation despite a strong ethos of egalitarianism. Through the presentation of empirical data I argue that many of the characteristics of modern and colonial period African societies that have been seen by some as devolved social systems disrupted by the slave trade and colonial practices may in fact be the end results of highly complex political histories. In particular, I suggest that the political organizations of many West African societies are derived from long histories of negotiations between social segments (including popular collective actions and revolutions), which have led to the development of diverse social contracts. At Kirikongo, the political actions of several constituencies over time resulted in a trajectory where inequalities were rejected altogether in favor of a reinvented egalitarianism, but similar processes have likely contributed to the formation of the myriad ethnographic and historically known polities in the region where the power of elites was constrained.
We study repeated games in which players have imperfect execution skill and one player’s true skill is not common knowledge. In these settings the possibility arises of a player “hustling”, or pretending to have lower execution skill than they actually have. Focusing on repeated zero-sum games, we provide a hustle-proof strategy; this strategy maximizes a player’s payoff, regardless of the true skill level of the other player. 1
Bill Hamilton was always at his best in small groups, and I would like to open and close my reflections with some thoughts generated by two small scientific meetings that Bill Hamilton attended. I was not present at the first meeting, in Tvarminne, Finland, but a photograph from the meeting made an impression on me. In the foreground stood Pekka Pamilo, the organizer of the meeting, with a rather worried expression on his face. In the background was Bill Hamilton, skating across the ice. Bill had brought his ice skates, intent on taking every advantage of this visit to the north. It turned out, however, that the ice was quite thin, so the organizers attempted to dissuade Bill. They made a general request that speakers at the meeting should please not attempt any ice skating, at least until after they had delivered their talks. Bill followed the letter of this request, but did not follow its spirit. After giving his talk, he donned his skates and set off. This picture brought to mind all sorts of associations. How can one not remember J. B. S. Haldane's musings about being willing to rescue two drowning brothers, or eight cousins. I hope Pekka will forgive me if I try to imagine his thoughts about the possibility of Bill falling though the ice. “ Well, I do not think I am related to him... On the other hand, everyone in Finland is more or less related! But then, he is not from Finland, is he? Still, we may not share many genes, but we do share a great many memes.” The other thought that comes to my mind is one that has been noted frequently since Bill's recent death from malaria. Bill Hamilton was a risk taker, not just in his life, but also in his science. In his work, too, he sometimes skated on thin ice, traveling where others would not. E. O. Wilson once used exactly this metaphor to describe a certain kind of scientist who is always drawn to the dangerous or to the forbidden: “They are the taboo breakers who enjoy the whiff of grapeshot and the crackle of thin ice” (Wilson, 1978: 283). When Bill skated on thin ice in Finland, the results were satisfactory: the ice may have crackled but it did not give way. When he skated on thin scientific ice, the results were usually not just satisfactory, but glorious. Bill Hamilton's most glorious ideas were kin selection and inclusive fitness. Talking about Hamilton's contributions to inclusive fitness is a bit like talking about Isaac Newton's contributions to dynamics or Charles Darwin's contributions to natural selection. He invented the idea, and he developed most of its important implications. There were some forerunners, as there always are in science. I think of Hamilton's contribution as a fusing of two traditions. First, there was population genetics. Hamilton didn't completely invent the idea of kin selection. The idea was foreshadowed by Haldane (1955), Fisher (1958), and Williams (Williams and Williams, 1957). However, none of them developed it in any detail, perhaps because they did not appreciate its general importance in nature. For that we can thank animal behaviorists, particularly those like Wynne-Edwards (1962) and Emerson (1960), who believed that cooperation was very common in nature. Bill neatly hybridized the two traditions. If cooperation and altruism were important in nature, then we needed an explanation that was consistent with population genetics, and so inclusive fitness was born. Hamilton was well suited to make this match. Those acquainted with Hamilton only through his best-known papers may think of him as a theoretician and might conclude that he had the theoretician's superficial knowledge of the natural world. But in fact it was his mathematical skills that were hard won, while as a natural historian he was, well, a natural. You can see evidence of this in many of his papers, but it comes out particularly in his lesser known papers on insects under bark (Hamilton, 1978) and on fig wasps (Hamilton, 1979). So was Hamilton's contribution a simple merging of the insights of an ethologist and a population geneticist? No, it wasn't that simple, for several reasons. First, there was a lot of thin ice between these areas, and skating from one to the other was not encouraged in the early 1960s. Geneticists were leery of anything that smacked of eugenics. That included any application of population genetics to behavior. It included most of all applications to understanding social behavior, something we have always been a little touchy about. If nature was nasty, rude, or bawdy, better not to know about it, let alone let the public know. Let me illustrate the idea in an unconventional way, with a bit of verse that I call “Family Values”: Would I jump in a lake To save my drowning cousin? It's not a risk I'd take For him plus half a dozen. But if you raise the stake And make the prize my brother? Now that's a deal I'll make... If you'll just toss in another. If this poem, and the Haldane quip it is based upon, elicit chuckles, it is in large part because they treat a topic that is uncomfortable for us. Most humor is built on discomfort of one form or another. In this case, we recognize that we make unconscious judgments akin to these, with awkward balances of self-interest and family interest, but we don't like to see ourselves as calculating self-servers. Now throw in a good dash of genetics, and the mixture becomes truly taboo. Perhaps that's why Haldane and others did not pursue the topic. Bill's recollections of his graduate career (Hamilton, 1996) describe the price that he paid for his desire to be where the ice is thin. He had difficulty finding advisors. He had no desk. He had no invitations to talk about his work. It was not even clear that his thesis work, which would produce some of the most heavily cited papers in evolutionary biology (Hamilton, 1964a,b), would be acceptable for a Ph.D. For someone who was not socially outgoing in the first place, the effect of this isolation was severe. He feared that he might be a crank; why else would all these manifestly smart people fail to see the interest in what he was doing? He took to working in train stations and public parks simply to have some minimal level of human interaction. Mary Jane West Eberhard made a telling point in her talk about Bill at a recent meeting (West-Eberhard, 2000). She noted that Bill's life serves as a counter-example to those critics who said that sociobiological knowledge was dangerous. He was proof that one can see all that is grim in the depths of our nature and still live a life of decency and kindness. Bill would have been uncomfortable with hagiography. His writings allude to a knowledge of the dark side of human nature, obvious to him through introspection, so clearly his thoughts were not always saintly. But whatever dark thoughts swirled in his mind, on the surface—and this is where it counts—he was basically a gentle man. Despite his highly critical mind, I never heard him criticize anyone in anything but the kindest, most self-effacing manner. He did not judge people by credentials and had time for people that others might consider to be amateurs or even crackpots, George Price being a notable example. And while he no doubt appreciated the recognition he eventually received, particularly given his lonely days as a graduate student, he did not seem to crave recognition excessively. Dawkins reported one example where Bill gave credit to someone else for an idea that was really his own and had to be confronted with the evidence from his own paper (Dawkins, 2000). Then, as Dawkins described it with an adverbial tour de force, Bill “ eeyorishly” admitted that, yes, he'd had the idea, but the other fellow had put it much better. I can give another small illustration from my own experience. In 1985 I published a paper using Price's rule to obtain a new expression for inclusive fitness (Queller, 1985). Alan Grafen then chided me (Grafen, 1985), quite rightly, for having neglected to cite Hamilton's paper using Price's rule (Hamilton, 1970). My only excuse is that Bill had read my paper in manuscript without ever pointing out the omission, which he must have noticed. For that matter, I had learned about Price's rule directly from Bill in seminars at the University of Michigan. If I remembered Price's rule well and forgot Bill's uses of it, it is partly because of the selfless way that Bill taught the subject. There is a another reason that Hamilton's contribution cannot be viewed as a simple merging of naturalist and theoretical traditions. He did not just come up with any old theoretical model. For example, one could model the evolution of altruism for some particular limited set of conditions (George and Doris Williams had already done this; Williams and Williams, 1957), but then one has to wonder how general the conclusions are. And it is also possible, as other modelers later showed, to add so many mathematical bells and whistles that we lose track of the general theme. In contrast, what Hamilton came up with was a theory that was not only basically true, but also beautiful and elegant. I'm not speaking of the mathematical derivation in his 1964 paper, which was actually rather gruesome. I'm speaking of the result, what has come to be known as Hamilton's rule. It is so simple that even a non-mathematical mind can easily understand it and wield it, and so general that it can often be applied to new social evolution problems without any fresh mathematical modeling. How was this simple elegance achieved? I think there are two main reasons. First, Hamilton was willing to make assumptions that allowed the result to be simple without seriously compromising the biology. For example, he assumed that selection would be weak. Stronger selection has the effect of distorting the relatednesses away from their familiar values, and it makes them dependent on genetic details such as dominance. Hamilton's assumption was justified because weak selection is presumably common. For that matter, it's probably not so bad an approximation for stronger selection. A little distortion of correlation coefficients doesn't matter too much to someone interested in the real world, where estimates of parameters are typically only good to about one significant digit anyway. The second reason inclusive fitness is so useful is its inversion of fitness calculation methods. Instead of grouping together all effects of others on x's fitness, it calculated all the inclusive effects of x on others' fitnesses. This actor-centered approach is what makes the method so easy to apply. In Hamilton's own words: “The social behaviour of a species evolves in such a way that in each distinct behaviour-evoking situation the individual will seem to value his neighbors' fitness against his own according to the coefficients of relationship appropriate to the situation” (Hamilton, 1964b: 19). It has become clear in recent years that the same behaviors can also often be understood as a form of group selection—not the old group selection of Wynne-Edwards, but nevertheless a method that involves partitioning of selection into within-group and between-group components (see Sober and Wilson, 1998). But the fact remains that almost no one uses these methods much to think about and solve interesting problems. Each of the two methods can dissect social evolution into component parts, but where inclusive fitness divides nature neatly at the joints, other methods seem to hack clumsily through the long bones. Inclusive fitness and kin selection were important on several levels. First, of course, they provided an explanation for the evolution of altruism. We still don't know whether Hamilton's famous haplodiploid hypothesis, based on three-quarters relatedness (Hamilton, 1964b, 1972), explains the origin of eusociality. But it seems certain that the answer does lie within his more general framework of relatedness, costs, and benefits. For the study of social insects, another result of inclusive thinking was perhaps even more interesting. The theory did not simply explain the altruism that we already knew about. It also predicted something we did not know much about: conflicts within colonies. Because inclusive fitness interests often differ even among close relatives (Hamilton, 1972), there can be conflicts over who should be queen, conflicts over who should lay the male-destined eggs, and conflicts over sex ratios (reviewed in Queller and Strassmann, 1998). Studies in these areas have amply satisfied the requirement that a good theory should not just explain what is known, but also make novel and successful predictions. I think a parallel phenomenon occurs in the world beyond social insects. Perhaps even more important than the explanation of altruism itself was the general validation given to selfish gene models. If selfish genes are to be of any value in explaining the evolution of social behavior, they simply must be able to explain the cases where the behavior is not phenotypically selfish. Otherwise the method must be counted as a failure. So kin-selected explanations of altruistic behavior gave life to selfish gene explanation in areas where kinship was not paramount. Hamilton's own work clearly shows this. He didn't stop with altruism. He made pioneering contributions in many other areas. The accompanying pieces in this issue describe his contributions to the study of sexual selection and parasites, but his work also included important contributions to senescence theory (Hamilton, 1966), sex ratios (Hamilton, 1967), selfish herds (Hamilton, 1971), dispersal (Hamilton and May, 1977), tit-for-tat cooperation (Axelrod and Hamilton, 1981), and within-individual conflict (Hamilton, 1967). This truly formidable list of accomplishments, and the whole selfish gene tradition of which it is a part, emerged from a confidence based on Hamilton's success in solving the potentially fatal problem of altruism. Finally, in recent years it has become increasingly clear that a theory of altruism and cooperation is important for a much grander reason than solving the annoying puzzle of the social insects. It is also needed to explain a much more pervasive kind of cooperation; the evolution of the organism itself (Maynard Smith and Szathmáry, 1995) why do cells cooperate in a body? Why do formerly independent bacteria evolve into organelles? How did replicators get together in the first place? Organisms, though they compete selfishly with each other, are themselves cooperative entities. Cooperation is therefore fundamental to all of life. I began with a small scientific meeting in Finland. Let me close with another one, in Castiglioncello, Italy. The highest scientific compliment I have ever received was one that Bill delivered there, actually to my wife and collaborator Joan Strassmann. Bill had, many years previously, done field work in Brazil on the troubling question of how sociality could be maintained in wasps with many queens. We had recently helped show, with molecular tools that had not been available to Bill, how relatedness was kept at levels consistent with kin selection (Queller et al., 1988, 1993; West Eberhard, 1978). What he said to Joan was “Now I will have to think up a different question to ask St. Peter when I meet him.” Of course, this was ridiculously inflated praise, a reflection of Bill's generosity rather than his acumen. He was no doubt signaling this exaggeration by his use of the religious reference, since Bill did not seem to be a conventionally religious man. Instead, he is some one who saw his afterlife more in terms of burying beetles (Hamilton, 2000) than in terms of meeting St. Peter. Still, I'd like to run with idea for just a moment. In the sad days after Bill died, the thought of him interrogating St. Peter gave me a certain amount of solace, and perhaps even pleasure. It's not that I can imagine what Bill's question was. Nor was it the thought of him receiving a satisfactory answer. Instead, what appeals to me is the impact on old St. Peter. I imagine him at first flummoxed because he couldn't answer the question, then annoyed because he had never thought of it himself, and finally intrigued by the implications. I imagine him spending his free moments over the next few centuries thinking about it, making new observations on the teeming life below, scribbling some population genetic equations in the margins of his heavenly register, and perhaps running some simulations on God's fastest supercomputer. Perhaps I overestimate St. Peter's curiosity, but Bill's questions have always had that kind of effect. That they will long continue to do so is his legacy to us.
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.
In this article, we propose a comprehensive conception of what personality traits are and what they mean in lay personology. Our conception is a pragmatic one that relies on the ecological concept of affordance and the theory of dual knowledge. It is not based on the same knowledge-building process as other pragmatic conceptions in that it distinguishes evaluative knowledge, produced by the generalization of affordances, from descriptive knowledge, deemed to be of limited importance in trait usage. It posits that an essential component of the meaning of traits is how others act towards the persons who possess these traits. We present a compilation of ten experimental studies in various areas of interest (statistical studies of trait/behavior associations, semantic decision-making, person memory, judgments at zero acquaintance) to prove the importance of the evaluative component composed of others' behaviors (OBs). These experiments show that the evaluative component 1. includes a repertoire of behaviors that is just as reliable for encoding traits as the repertoire of behaviors ascribed to the target; 2. can be just as accessible as the descriptive component for highly evaluative traits; 3. is very powerful in structuring mental representations of persons; 4. is more highly activated in social contexts, especially in workevaluation situations, and 5. is more discriminative than the descriptive component in immediate appraisals of persons.