Game warping in Ethereum

The concept of game warping (coined in this article ↗) dictates that a particular implementation of a “source of truth” general ledger which punishes non-cooperative behavior (Ethereum’s implementation, specifically) can convert all non-cooperative games to cooperative games because the ledger acts as a sort of central game authority, making cooperation the best strategy for all players (see Nash equilibrium).

• Theoretically, this is achieved by punishing non-cooperation, which effectively motivates players to cooperate as long as the rewards of non-cooperation do not outweigh the punishments
  • This defies the Prisoner’s dilemma
    • Note: it doesn’t actually play by the rules of the Prisoner’s dilemma because it adds an outside factor which negates the punishments defined in the Prisoner’s dilemma
• The way Ethereum implements this is by creating a “smart contract” which punishes non-cooperative players with “burning” (loss of all personal stakes in the central Ethereum ledger)

Applied to the payoff matrix in the Prisoner’s dilemma, this might look like:

• Original Prisoner’s dilemma:

  A \ B	B cooperates	B betrays
  A cooperates	-1 \ -1	-3 \ 0
  A betrays	0 \ -3	-2 \ -2

• + Ethereum contract where each player has 1000 points at stake (invested in the ledger) which will be “burned” if betrayal is chosen:

  A \ B	B cooperates	B betrays
  A cooperates	-1 \ -1	-1000 \ 0
  A betrays	-1000 \ -3	-1000 \ -1000

• = Composite game:

  A \ B	B cooperates	B betrays
  A cooperates	-1 \ -1	-3 \ -1000
  A betrays	-1000 \ -3	-1002 \ -1002