Game warping in Ethereum -

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Game warping in Ethereum

Keywords: cryptocurrency, game theory, non-cooperative game theory
  • 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