The Importance of Reputation for the Evolution of Decentralization
Craig Calcaterra, Wulf A. Kaal · 2021
Chapter ) underscores the importance of reputation systems for the decentral- ized economy. Reputation is the proper incentive, instead of money, for motivating the most efficient cooperation and long-term stability in business. Existing Web@ smart contract solutions often incentivize people to devote their energy to taking ad- vantage of their business associates in anonymous environments. Through the prom- ise of future business opportunities, reputation changes the relationship from adver- sary to partner. Reputation changes the transaction from a single-stage zero-sum game into a repeated positive-sum game. The value that is created in the transaction is that the reputation of both parties is improved in a harmonious profitable transac- tion for the long-term. The book can be accessed here: https://www.amazon.com/Decentralization-Technologies-Organizational-Societal-Struc- ture/dp/3110673924/ and here: https://www.degruyter.com/view/title/569051 Chapter ;. Reputation Reputation is the proper incentive, instead of money, for motivating the most ef- ficient cooperation and long-term stability in business. Markets are a necessarily chaotic environment that must permit an enormous va- riety of behaviors, where all parties need the freedom to invent new strategies for cooperation. Such freedom also creates limitless opportunities for preying on anyone with less information. Such information asymmetries create endless arbitrage oppor- tunities: renegotiating, leveraging an opponent’s sunken costs, pushing the limits of the law or breaking it outright. Markets lose their ability to create value and profit Electronic copy available at: https://ssrn.com/abstract=3782210
Cite: Craig Calcaterra, Wulf A. Kaal, The Importance of Reputation for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782210. https://doi.org/10.2139/SSRN.3782210
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