Blunt Honesty, Incentives, and Knowledge Exchange

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Citation: Bruce Knuteson (2016/01/25) Blunt Honesty, Incentives, and Knowledge Exchange.

doi: 10.2139/ssrn.2713998




Lots of info available gratis on net, but subset unavailable but there exist parties who would mutually benefit by trade to reveal this info. Such trades not made as only way to demonstrate value of info is to reveal it. Mechanisms involving contracts expensive.

Author proposes protocol in which intermediary 'X' mediates entity 'Q' needing info and info provider 'A'. Q judges A's answer but pays the same amount whether answer is correct or not, and X receives same fee whether answer is correct or not. A provides earnest money equivalent to X's fee, Q provides a deposit used to pay X and A, plus earnest money which all forfeited in case answer neither accepted nor rejected. If answer accepted, earnest money returned to Q and A and Q's deposit used to pay X and A. If answer rejected, Q's earnest money returned and A's earnest money forfeited, along with Q's deposit above X's fee. Forfeited funds are donated to charity. In this way each party's incentives aligned with providing correct information and evaluation.

If evaluation rule can be unambiguously specified by Q such that Q's judgement not required, no earnest money from Q is needed.

Theoretical and practical relevance:

Kn-X is a for-profit exchange using and patent encumbering an extended version of protocol described.