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Cyphernomicon 15.5

Reputations and Credentials:
Reputation-Based Systems and Agoric Open Systems


   15.5.1. Evolutionary systems and markets
           + markets,  emergent order, Hayek, connectionism
             - many related ideas...spontaneous order, self interest,
                agents, etc.
             + a critique of "blind rationalism"
               - or hyperrationalism, the idea that a form model can
                  always be found
           - order can develop even in anonymous systems, provding
              certain types of contacts are established, certain other
              things
   15.5.2. shell games...who knows what?
   15.5.3. key is that would-be "burners" must never know when they are
            actually being tested
           - with devastating effects if they burn the tester
           + example: how to guarantee (to some degree of certainty)
              that an anonymous bank is not renegging (or whatever)?
             - e.g., a Swiss bank that denies knowledge of an account
             - key is that bank never know when a withdrawal is just a
                test (and these tests may be done frequently)
           - the importance of repeat business
   15.5.4. another key: repeat business....when the gains from burning
            someone are greater than the expected future business.....
   15.5.5. reputations are what keep CA systems from degenerating into
            flamefests
           - digital pseudonyms mean a trail is left, kill files can be
              used, and people will take care about what they say
           - and the systems will not be truly anonymous: some people
              will see the same other people, allowing the development of
              histories and continued interactions (recall that in cases
              where no future interaction is exected, rudeness and
              flaming creeps in)
           + "Rumormonger" at Apple (and elsewhere) always degenerates
              into flames and crudities, says Johann Strandberg
             - but this is what reputations will partly offset
   15.5.6. "brilliant pennies" scam
   15.5.7. "reputation float" is how money can be pulled out of the
            future value of  a reputation
   15.5.8. Reputation-based systems and repeat business
           + reputations matter...this is the main basis of our economic
              system
             - repeat business....people stop doing business with those
                they don't trust, or who mistreat them, or those who just
                don't seem to be reputable
             - and even in centrally-controlled systems, reputations
                matter (can't force people to undertake some relations)
           - credit ratings (even for pseudonyms) matter
           - escrow agents, bonding, etc.
           - criminal systems still rely on reputations and even on
              honor
           - ironically, it is often in cases where there are
              restrictions on choice that the advantages of reputations
              are lost, as when the government bans discrimination,
              limits choice, or insists on determining who can do
              business with who
           + Repeat business is the most important aspect
             - granularity of transactions, cash flow, game-theoretic
                analysis of advantages of "defecting"
             - anytime a transaction has a value that is very large
                (compared to expected future profits from transactions,
                or on absolute basis), watch out
             - ideally, a series of smaller transactions are more
                conducive to fair trading...for example, if one gets a
                bad meal at a restaurant, one avoids that restaurant in
                the future, rather than suing (even though one can claim
                to have been "damaged")
             - issues of contract as well
 

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