The Behavioral Economics of Crypto , How Does this Game Work ?
did you ever behave differently when you get back? I mean when you are observed you start to behave in a different way to avoid being judged? unknown eyes and yet they push you to behave "correctly" in society, it does not happen only with you that you've already noticed but much more than that there is a socio-psychological study on this subject showed that people are less likely to free-ride a supposed honor system based coffee stand when a sign asking them to leave money in a cup had a pair of eyes drawn on it. Actually, people left nearly three times more money than they did when the picture was just of flowers.
so it's not difficult to identify this trend, called "reputation management" , which is only common sense, but when it comes to inducing people to cooperate when no one looks at them, and of course when drawing eyes on paper is not enough. we fight for this in the real world about the limited natural resources and we find enough difficulty on the ground, as for example by asking a guy to lower his AC current in summer, he will tell himself what to do with it my neighbor will not respect that anyway and therefore why should I suffer for nothing.
Many people believe that it is the job of the government to regulate and equitably allocate such common resources. Without the laws that govern the world it will be chaos. We can not trust people to be altruistic, so we need Uncle Sam, and his very anticipated eyes, to come and do the thing.
Let's look at what the common dilemmas in the cyber world looked like. Storage, bandwidth and computing are the three basic infrastructural needs of the electronic universe. And rather than entering into a social contract directly with Uncle Sam, cyber citizens have entered into social contracts (ie Terms of Use) with the Big Four. It looks like this: we'll provide you with reliable storage, bandwidth and computation, and in return you'll let us leverage your data and metadata for profit.
Users agree, and voila: Google, Amazon, Facebook, and Apple traffic-direct their limited resources, as they please. In exchange, the Big Four mine exploits the data generated by the users. And all the people of the world live happily after cyber-lives. Until we understand that Uncle Sam is no longer so neutral about everything that is clear and they realize that no one is watching watchmen - except the friends of lobbyists - which is not not so reassuring.
Cryptocurrencies are now designed and adapted to meet specific IT resource needs. Filecoin uses coins as incentives for cooperation for a decentralized Dropbox storage system. Ethereum uses coins for decentralized computing power. AX uses coins as incentives for cooperation for decentralized bandwidth. Do you see the theme? The heart of the crypto crowd is to replace the ruling third parties with unwavering algorithms and registers that every peer can watch. Everyone is a guardian. The vision of ancient Greece for democracy has materialized in the electronic economic field.
But what makes the whole thing different from crypto-anarchism? Shortly after Bitcoin began to take traction and be used by the infamous Silk Road, a large part of the public began to equate crypto-currencies with suspicious commercial transactions. Bitcoin is not regulated, so obviously the goal of Bitcoin is to empower illegal and immoral transactions, the thought is gone. But, in reality, Bitcoin is regulated. It's the regulation of the crowd. And that could be a major mess that social psychologists can work with.
according to social psychologist Mark Van Vugt There are four main pillars that contribute to the success of common dilemmas - the four "I's" - which are: identity, institutions, incentives and information. So let's take a look at what these new encryption startups of the crypto era. Let's detail a little more these points.
- Identity:
many of us equate cryptocurrencies with privacy, so we must not forget that they are all based on public registries. we could call them confidential but not really anonymous in itself. Each action is added to a record associated with a public key. Although you do not know that Jane Smith snatched 5 people in a row, you know that Public Key X snatched 5 people in a row, was kind to two people before that, and rolled before that. Probably better not to take your chances of doing business with X public key.
It's more powerful than you could imagine. In what are called "dictator games" which is a game where an individual is placed in a seat of total power playing the role of "dicator" in a completely anonymous way during which we observe the ability of the person in question to share its resources with one another, psychologists have found that people are far from being right in their interactions. Not surprisingly, when the dictator enjoys anonymity, he tends to accumulate resources. However, if the rules of the game are changed so that the role of dictator changes between the parties in subsequent rounds, and players can keep a mental record of each other's dictatorial roles, people become much more friendly. This change in behavior is not surprising, but keep in mind that this happens even if the private identity of anyone is not revealed. Give me a public record, and I'll show you an honest (probabilistic) man.
- institutions:
Here a person might disagree with Van Vugt. He says institutions are needed to build trust between individuals in the exchange of commons. But what we can see with the cryptoeconomic exchanges allows us to say that they operate orthonormally to this principle. Instead of trying to build trust, they simply get rid of it. They create "no trust" systems. Trust is automated in this boundary. It's not something you pay for, it’s something you take for granted.
Let's say that "algorithms" can substitute for "institutions" in the world of encryption. Bitcoin makes the reliability of a buyer irrelevant. The algorithm simply ensures that no double expense will occur, adds the exchange to the blockchain registry, and all eyes everywhere testify to this interaction. Cryptoeconomic platforms based on blockchain eliminate the need for trusted institutional mediators.
- Incentives:
Humans seek pleasure and avoid pain. This is obvious, and he has not escaped the likes of Bitcoin, AX, Filecoin and Ethereum. These platforms have built incentives into the software infrastructure, and so skilfully to circumvent chicken and egg problems that plague new currencies. The Bitcoin operating system, for example, frees fewer parts with each new block. This promotes rapid adoption by eliminating long-term inflation, and makes the coins extracted earlier and more valuable when considering the proof of work required to exploit them.
Relying on this idea AXE has innovated by creating its two-dimensional blockchain. When the parts are exchanged for a decentralized bandwidth, the parts collect a kind of wear. Thus, first-time adopters who "hodl" coins will have the most valuable coins in the entire system. But mining restores a part of life in a used coin. This wear feature prevents Sybil's attacks, as artificial trading to boost his reputation would result in the wear of the coins, which ultimately punishes the intruder. This is an example of how cryptoeconomic platforms can add punishments beyond bad reputations.
- Information:
Humans are hungry for information. s. We need to know that our cooperative actions (or inactions) will really make a difference. These cryptocurrency companies will have to educate their users on how to affect the overall ecosystem and how to make a measurable difference. This goes for personal rewards and punishments and reputation management too. In this case, it is not intuitive, you must know the basic causes-and-effects of your systems.
Psychologists are cynical about human nature. That's why we talk about their games. One could assume that cryptoeconomic platforms should aim to disseminate information that arouses "elevation" (a sense of fear and wonder at the moral beauty) of cryptographic decentralized platforms.
People also need information about why they should be concerned about cryptographic platforms. If these big projects of the ICO really want to reduce the free riders, they must make their message a little clearer. By being honest in these crypto-economic platforms, users allow marginalized individuals to access private data storage, computing and information transfer. The point of crypto-ce, crypto-decentralized all is not to buy drugs, and it's not really to avoid international transfer fees or even a lot to maintain privacy. These are side effects.
It is to say "down with tyrants". It is to bring the costs of information to a level close to zero, so that anyone in the world can educate themselves. It is to prevent censorship. It's allowing women to have bank accounts. This will prevent corrupt governments from mysteriously disappearing savings transactions for life. It is to break the telecommunications monopolies. It's playing at the playground level. It's to disrupt racism, sexism, classism. It's getting out of the dangerous matrix in which lobbyists and politicians have connected us. Do you want to cheat and move freely in this system? Do you want to destroy this vision? I guess you do not do it.