26,681 research outputs found
Oceanic Games: Centralization Risks and Incentives in Blockchain Mining
To participate in the distributed consensus of permissionless blockchains,
prospective nodes -- or miners -- provide proof of designated, costly
resources. However, in contrast to the intended decentralization, current data
on blockchain mining unveils increased concentration of these resources in a
few major entities, typically mining pools. To study strategic considerations
in this setting, we employ the concept of Oceanic Games, Milnor and Shapley
(1978). Oceanic Games have been used to analyze decision making in corporate
settings with small numbers of dominant players (shareholders) and large
numbers of individually insignificant players, the ocean. Unlike standard
equilibrium models, they focus on measuring the value (or power) per entity and
per unit of resource} in a given distribution of resources. These values are
viewed as strategic components in coalition formations, mergers and resource
acquisitions. Considering such issues relevant to blockchain governance and
long-term sustainability, we adapt oceanic games to blockchain mining and
illustrate the defined concepts via examples. The application of existing
results reveals incentives for individual miners to merge in order to increase
the value of their resources. This offers an alternative perspective to the
observed centralization and concentration of mining power. Beyond numerical
simulations, we use the model to identify issues relevant to the design of
future cryptocurrencies and formulate prospective research questions.Comment: [Best Paper Award] at the International Conference on Mathematical
Research for Blockchain Economy (MARBLE 2019
Sticks and Carrots for the Design of International Climate Agreements with Renegotiations
This paper examines stability of international climate agreements for carbon abatement under an optimal transfer rule and renegotiations. The optimal transfer rule suggested to stabilise international environmental agreements (Weikard 2005, Carraro, Eyckmans and Finus 2006) is no longer optimal when agreements are renegotiated. We determine the conditions for optimal self-enforcing sequences of agreements. If these conditions are met, then transfer payments can be arranged such that no country wants to change its membership status at any stage. In order to demonstrate the applicability of our condition we use the STACO model, a 12-regions global model, to assess the impact of welldesigned transfer rules on the stability of an international climate agreement. Although there are strong free-rider incentives, we find a stable grand coalition in the first commitment period in a game with one round of renegotiation
Forming and Dissolving Partnerships in Cooperative Game Situations
A group of players in a cooperative game are partners (e.g., as in the form of a union or a joint ownership) if the prospects for cooperation are restricted such that cooperation with players outside the partnership requires the accept of all the partners. The formation of such partnerships through binding agreements may change the game implying that players could have incentives to manipulate a game by forming or dissolving partnerships. The present paper seeks to explore the existence of allocation rules that are immune to this type of manipulation. An allocation rule that distributes the worth of the grand coalition among players, is called partnership formation-proof if it ensures that it is never jointly profitable for any group of players to form a partnership and partnership dissolution-proof if no group can ever profit from dissolving a partnership. The paper provides results on the existence of such allocation rules for general classes of games as well as more specific results concerning well known allocation rules.cooperative games; partnerships; partnership formation-proof; partnership dissolution-proof
The incentives to participate in and the stability of international climate coalitions: a game theoretic approach using the WITCH Model
This paper uses WITCH, an integrated assessment model with a game-theoretic structure, to explore the prospects for, and the stability of broad coalitions to achieve ambitious climate change mitigation action. Only coalitions including all large emitting regions are found to be technically able to meet a concentration stabilisation target below 550 ppm CO2eq by 2100. Once the free-riding incentives of non-participants are taken into account, only a âgrand coalitionâ including virtually all regions can be successful. This grand coalition is profitable as a whole, implying that all countries can gain from participation provided appropriate transfers are made across them. However, neither the grand coalition nor smaller but still environmentally significant coalitions appear to be stable. This is because the collective welfare surplus from cooperation is not found to be large enough for transfers to offset the free-riding incentives of all countries simultaneously. Some factors omitted from the analysis, which might improve coalition stability, include the co-benefits from mitigation action, the costless removal of fossil fuel subsidies, as well as alternative assumptions regarding countriesâ bargaining behaviour.Climate policy; Climate coalition; Game theory; Free riding.
Controlled Matching Game for Resource Allocation and User Association in WLANs
In multi-rate IEEE 802.11 WLANs, the traditional user association based on
the strongest received signal and the well known anomaly of the MAC protocol
can lead to overloaded Access Points (APs), and poor or heterogeneous
performance. Our goal is to propose an alternative game-theoretic approach for
association. We model the joint resource allocation and user association as a
matching game with complementarities and peer effects consisting of selfish
players solely interested in their individual throughputs. Using recent
game-theoretic results we first show that various resource sharing protocols
actually fall in the scope of the set of stability-inducing resource allocation
schemes. The game makes an extensive use of the Nash bargaining and some of its
related properties that allow to control the incentives of the players. We show
that the proposed mechanism can greatly improve the efficiency of 802.11 with
heterogeneous nodes and reduce the negative impact of peer effects such as its
MAC anomaly. The mechanism can be implemented as a virtual connectivity
management layer to achieve efficient APs-user associations without
modification of the MAC layer
Sequential Formation of Coalitions through Bilateral Agreements in a Cournot Setting
We study a sequential protocol of endogenous coalition formation based on a process of bilateral agreements among the players. We apply the game to a Cournot environment with linear demand and constant average costs. We show that the final outcome of any Subgame Perfect Equilibrium of the game is the grand coalition, provided the initial number of firms is high enough and they are sufficiently patient.Coalition formation, bilateral agreements, Cournot.
Regional and Sub-Global Climate Blocs.A Game-Theoretic Perspective on Bottom-up Climate Regimes
No international regime on climate change is going to be fully effective in controlling GHG emissions without the involvement of countries such as China, India, the United States, Australia, and possibly other developing countries. This highlights an unambiguous weakness of the Kyoto Protocol, where the aforementioned countries either have no binding emission targets or have decided not to comply with their targets. Therefore, when discussing possible post-Kyoto scenarios, it is crucial to prioritise participation incentives for all countries, especially those without explicit or with insufficient abatement targets. This paper offers a bottom-up game-theoretic perspective on participation incentives. Rather than focusing on issue linkage, transfers or burden sharing as tools to enhance the incentives to participate in a climate agreement, this paper aims at exploring whether a different policy approach could lead more countries to adopt effective climate control policies. This policy approach is explicitly bottom-up, namely it gives each country the freedom to sign agreements and deals, bilaterally or multilaterally, with other countries, without being constrained by any global protocol or convention. This study provides a game-theoretic assessment of this policy approach and then evaluates empirically the possible endogenous emergence of single or multiple climate coalitions. Welfare and technological consequences of different multiple bloc climate regimes will be assessed and their overall environmental effectiveness will be discussed.Agreements, Climate, Incentives, Negotiations, Policy
Regional and sub-global climate blocs. A game-theoretic perspective on bottom-up climate regimes
controlling GHG emissions without the involvement of countries such as China, India, the United States, Aust rali a, and possibly other developing countries. This highlights an unambiguous weakness of the Kyoto Protocol, where the aforementioned countries either have no binding emission targets or have decided not to comply with their targets . Therefore, when discussing possible post-Kyoto scenarios, it is crucial to priori tise part icipation incentives for all countries, especially those without explicit or with insufficient abatement targets. This paper offers a bottom-up game-theoretic perspective on participation incentives. Rather than focusing on issue linkage, t ransfers or burden sharing as tools to enhance the incentives to par t icipate in a climate agreement, thi s paper aims at exploring whether a di fferent policy approach could lead more count ries to adopt ef fective climate cont rol policies. This policy approach is explicitly bottom-up, namely i t gives each country the freedom to sign agreements and deals, bilateral ly or multila terally, with other countries, without being constrained by any globa l protocol or convention. This study provides a game-theoretic assessment of this policy approach and then evaluates empirically the possible endogenous emergence of single or multi ple climate coalitions. Welfare and technological consequences of different mul tiple bloc climate regimes will be assessed and their overall environmental effectiveness will be discussed.Agreements, Climate, Incentives, Negotiations, Policy
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