Abstract
Human decision making is often prone to biases and irrationality. Group decisions add dynamic interactions that further complicate the choice process and frequently result in outcomes that are suboptimal for both the individual and the collective. We show that an implementation of a Blockchain protocol improves individuals’ decision strategies and increases the alignment between desires and outcomes. The Blockchain protocol affords (1) a distributed decision, (2) the ability to iterate repeatedly over a choice, (3) the use of feedback and corrective inputs, and (4) the quantification of intrinsic choice attributes (i.e., greed, desire for fairness, etc.). We test our protocol’s performance in the context of the Public Goods Game. The game, a generalized version of the Prisoner’s Dilemma, allows players to maximize their own gain or act in ways that benefit the collective. Empirical evidence shows that participants’ cooperation in the game typically decreases once a single player favors their own interest at the expense of others’. In our Blockchain implementation, “smart contracts” are used to safeguard individuals against losses and, consequently, encourage contributions to the public good. Across different tested simulations, the Blockchain protocol increases both the overall trust among the participants and their profits. Agents decision strategies remain flexible while they act as each other’s source of accountability (which can be seen as formalized distributed “Ulysses contract”). To highlight the contribution of our protocol to society at large we incorporated an entity that represents the public good. This benevolent independent beneficiary of the contributions of all participants (e.g. a charity organization or a tax system) maximized its payoffs when the Blockchain protocol was implemented. We provide a formalized implementation of the Blockchain protocol and discuss potential applications that could benefit society by more accurately capturing individuals’ preferences. For example, the protocol could help maximize profits in groups, facilitate democratic election that better reflect the public opinion, or enable group decision in circumstances where a balance between anonymity, diverse opinions, personal preferences and loss-aversion play a role.
Highlights
Among the fundamental assumptions of traditional economic theory is the belief that individuals act to maximize the utility they receive from the decisions they make (Smith, 1776)
We suggest that the protocol effectively allows for a democratic decision making process that maximizes all individuals benefit while contributing to the public goods in an optimal fashion
To illustrate the trust trajectory in the game we selected, first, a subset (n = 510) of all combinations of η1, η2, Initial trust (iT) such that they focus on the realistic conditions that are reflected in behavioral games
Summary
Among the fundamental assumptions of traditional economic theory is the belief that individuals act to maximize the utility they receive from the decisions they make (Smith, 1776). Contrary to the traditional economic theory, years of research in behavioral economics have shown that people frequently behave irrationally (Thomas, 1993; Ariely, 2008). Examples for such irrational behaviors are seen in marketing, healthcare, dating, the legal system, and numerous other domains (Levy et al, 2010; Cerf et al, 2015; Mentovich et al, 2016). People are more persuaded to behave in ways that violate their normal personality traits when they are in a good mood (Bless et al, 2001), or, on online dating platforms, are more likely to display preference toward users whose name sound like theirs, despite stating explicitly that their decisions were not biased (Levy et al, 2010)
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