Topic: Is spending bitcoins an example of a prisoner's dilemma? (Read 3566 times)
I agree if we want to attract businessmen to use bitcoin should have to purchase power on the increase again, with the pile up in fact we are slowly killing the value of bitcoin
Here and become millionaires 
If you just focus on the largest wallets then yes I see a bit of a prisoner's dilemma. But there would have to be some stressor - like the value of BTC starts dropping as doom & gloom news starts to mount.
Then the large wallets play the game: they can all hold and help the price stabilize. Or one of them can coward-out and dump their BTC in the hope of getting all they can, further suppressing the price.
Then the large wallets play the game: they can all hold and help the price stabilize. Or one of them can coward-out and dump their BTC in the hope of getting all they can, further suppressing the price.
This hero member was a student at the time and couldn't really afford to buy many even at that low, low price.
Damn, all those Hero Members must be millionaires by now if they held their coins. They didn't even need to have a lucky strike and sell right at the last ATH, they would be millionaires by the current price of 230 a pop. I guess they panic sold at like 30 dollars or way before thinking holding long term was a dumb "billionaire bedroom" idea.
Right now, I would DEFINITELY spend more Bitcoins if I could purchase more things I actually needed rather than simply use them to benefit the market.
absofuckinglutely.
i don't want or need geek stuff, computer stuff, intangibles, or 99% of the stuff that's currently being hawked for BTC.
i want regular gold-toe socks, levi 501s, soap, generic aspirin and other OTC meds, herbal supplements, bulk-pak food staples reasonably competitive with wal-mart, some guy to clean out my gutters, booze, movie rentals (on-line or redbox), and all the rest of it.
pretty accurate, and that could only happen with more adoption and if people accept bitcoin for their services and their products, then people won't mind spending their btc, not everybody puts in cold storage and plans to take it out after 20 years, lol those bedroom billionaire dreams
This is definitely an issue that can be addressed using game-theory models. The Prisoner's dilemma is just a simple one that's easy to explain.
For our personal benefit - and assuming Bitcoins continue increasing in value for the foreseeable future - the best strategy for each and every one of us holding Bitcoins is to hold onto them until we're starving. The person who does this and doesn't spend ANYTHING until that point is the clear winner - unless the market crashes and Bitcoins become worthless. This will happen if the aforementioned strategy is used by EVERYONE, which is why it's not a stable strategy.
A stable strategy (meaning the market lives and benefits it users) is one where people use Bitcoins despite their best interest (if their interest is defined as having the maximum amount of resources) and instead operate in a manner that also ensures the interests of other users and the market. There's no sweet spot: some will hoard all their Bitcoin, others will spend it all, and most will operate along this continuum. The market will continue functioning if enough of us contribute to its existence in a sufficient manner.
the rational strategy, then, is to:
1) Hold on to as many Bitcoins as you can afford
2) Contribute to the market (by participating in it, exchanging Bitcoins for goods) when your cost of doing that is low
3) Create incentives for people to spend their Bitcoins, making this option more lucrative for them than hoarding
Right now, I would DEFINITELY spend more Bitcoins if I could purchase more things I actually needed rather than simply use them to benefit the market.
For our personal benefit - and assuming Bitcoins continue increasing in value for the foreseeable future - the best strategy for each and every one of us holding Bitcoins is to hold onto them until we're starving. The person who does this and doesn't spend ANYTHING until that point is the clear winner - unless the market crashes and Bitcoins become worthless. This will happen if the aforementioned strategy is used by EVERYONE, which is why it's not a stable strategy.
A stable strategy (meaning the market lives and benefits it users) is one where people use Bitcoins despite their best interest (if their interest is defined as having the maximum amount of resources) and instead operate in a manner that also ensures the interests of other users and the market. There's no sweet spot: some will hoard all their Bitcoin, others will spend it all, and most will operate along this continuum. The market will continue functioning if enough of us contribute to its existence in a sufficient manner.
the rational strategy, then, is to:
1) Hold on to as many Bitcoins as you can afford
2) Contribute to the market (by participating in it, exchanging Bitcoins for goods) when your cost of doing that is low
3) Create incentives for people to spend their Bitcoins, making this option more lucrative for them than hoarding
Right now, I would DEFINITELY spend more Bitcoins if I could purchase more things I actually needed rather than simply use them to benefit the market.
The #3 part is what I dont see at all.
I mean we would really be at a incredible value, if like a huge commerce site like that already have bitcoin to say we offer 35% back on using bitcoin only.
Which would want people to go buy bitcoin just to have better discounts to save money.
3) Create incentives for people to spend their Bitcoins, making this option more lucrative for them than hoarding
4 years later and still no one is creating incentives for people to spend their bitcoins.
purse.io is a good try but still aliexpress is cheaper than purse.io.
absofuckinglutely.
i don't want or need geek stuff, computer stuff, intangibles, or 99% of the stuff that's currently being hawked for BTC.
i want regular gold-toe socks, levi 501s, soap, generic aspirin and other OTC meds, herbal supplements, bulk-pak food staples reasonably competitive with wal-mart, some guy to clean out my gutters, booze, movie rentals (on-line or redbox), and all the rest of it.
i don't want or need geek stuff, computer stuff, intangibles, or 99% of the stuff that's currently being hawked for BTC.
i want regular gold-toe socks, levi 501s, soap, generic aspirin and other OTC meds, herbal supplements, bulk-pak food staples reasonably competitive with wal-mart, some guy to clean out my gutters, booze, movie rentals (on-line or redbox), and all the rest of it.
This is one of the main reasons people hoard. I doubt that many of these things will be available for bitcoins in a way that makes them preferable to dollars for a very long time.
Of the things mentioned the ones that I see being available for bitcoins are the guy to clean your gutters, booze (I'll sell you nanobrewed beer for them currently, but I doubt you'd be willing to pay the price I'd ask) and online movie rentals.
Yes. I want to spend my bitcoins, but there is hardly anything I need that is sold with bitcoins, specially here in my country. I found there is a shop selling cat food that acepts bitcoins and will use it but apart from that there is nothing else.
Right now, I would DEFINITELY spend more Bitcoins if I could purchase more things I actually needed rather than simply use them to benefit the market.
absofuckinglutely.
i don't want or need geek stuff, computer stuff, intangibles, or 99% of the stuff that's currently being hawked for BTC.
i want regular gold-toe socks, levi 501s, soap, generic aspirin and other OTC meds, herbal supplements, bulk-pak food staples reasonably competitive with wal-mart, some guy to clean out my gutters, booze, movie rentals (on-line or redbox), and all the rest of it.
This is one of the main reasons people hoard. I doubt that many of these things will be available for bitcoins in a way that makes them preferable to dollars for a very long time.
Of the things mentioned the ones that I see being available for bitcoins are the guy to clean your gutters, booze (I'll sell you nanobrewed beer for them currently, but I doubt you'd be willing to pay the price I'd ask) and online movie rentals.
Hi,
A prisoner's dilema is a construct in game theory where there are 2 isolated prisoners and both are given the idea that if they testify against the other, they can get away. the dilemma is to cooperate with the other prisoner or to defect against him.
Is this analogy correct? Where are the assumptions wrong?
A prisoner's dilema is a construct in game theory where there are 2 isolated prisoners and both are given the idea that if they testify against the other, they can get away. the dilemma is to cooperate with the other prisoner or to defect against him.
Is this analogy correct? Where are the assumptions wrong?
This is a binary problem with two variables (2^2 = four outcomes) and no information exchange.
The assumptions quickly break down as BTC buyers/sellers can exchange information, and there is a point at which people would sell/buy.
For bitcoin, the decision occurs with each coin, or as a simplification, each holder. With 100 holders each making a decision to hold or sell for a given price, that is a binary tree of 100^2 (approx 30 digit number of outcomes.) Even is you added $1 steps for 11 to 20, that starts to add problem of dimensionality.
As someone has already posted, some people will keep some, sell some.
Yes, but...
It won't last. Once it sinks into people's heads that Bitcoins are immutable, that is, they can't be destroyed, corrupted or created too fast, people will come to understand that there is an intrinsic value to them.
It is this constraint that makes them great.
It won't last. Once it sinks into people's heads that Bitcoins are immutable, that is, they can't be destroyed, corrupted or created too fast, people will come to understand that there is an intrinsic value to them.
It is this constraint that makes them great.
Right now, I would DEFINITELY spend more Bitcoins if I could purchase more things I actually needed rather than simply use them to benefit the market.
absofuckinglutely.
i don't want or need geek stuff, computer stuff, intangibles, or 99% of the stuff that's currently being hawked for BTC.
i want regular gold-toe socks, levi 501s, soap, generic aspirin and other OTC meds, herbal supplements, bulk-pak food staples reasonably competitive with wal-mart, some guy to clean out my gutters, booze, movie rentals (on-line or redbox), and all the rest of it.
This is definitely an issue that can be addressed using game-theory models. The Prisoner's dilemma is just a simple one that's easy to explain.
For our personal benefit - and assuming Bitcoins continue increasing in value for the foreseeable future - the best strategy for each and every one of us holding Bitcoins is to hold onto them until we're starving. The person who does this and doesn't spend ANYTHING until that point is the clear winner - unless the market crashes and Bitcoins become worthless. This will happen if the aforementioned strategy is used by EVERYONE, which is why it's not a stable strategy.
A stable strategy (meaning the market lives and benefits it users) is one where people use Bitcoins despite their best interest (if their interest is defined as having the maximum amount of resources) and instead operate in a manner that also ensures the interests of other users and the market. There's no sweet spot: some will hoard all their Bitcoin, others will spend it all, and most will operate along this continuum. The market will continue functioning if enough of us contribute to its existence in a sufficient manner.
the rational strategy, then, is to:
1) Hold on to as many Bitcoins as you can afford
2) Contribute to the market (by participating in it, exchanging Bitcoins for goods) when your cost of doing that is low
3) Create incentives for people to spend their Bitcoins, making this option more lucrative for them than hoarding
Right now, I would DEFINITELY spend more Bitcoins if I could purchase more things I actually needed rather than simply use them to benefit the market.
For our personal benefit - and assuming Bitcoins continue increasing in value for the foreseeable future - the best strategy for each and every one of us holding Bitcoins is to hold onto them until we're starving. The person who does this and doesn't spend ANYTHING until that point is the clear winner - unless the market crashes and Bitcoins become worthless. This will happen if the aforementioned strategy is used by EVERYONE, which is why it's not a stable strategy.
A stable strategy (meaning the market lives and benefits it users) is one where people use Bitcoins despite their best interest (if their interest is defined as having the maximum amount of resources) and instead operate in a manner that also ensures the interests of other users and the market. There's no sweet spot: some will hoard all their Bitcoin, others will spend it all, and most will operate along this continuum. The market will continue functioning if enough of us contribute to its existence in a sufficient manner.
the rational strategy, then, is to:
1) Hold on to as many Bitcoins as you can afford
2) Contribute to the market (by participating in it, exchanging Bitcoins for goods) when your cost of doing that is low
3) Create incentives for people to spend their Bitcoins, making this option more lucrative for them than hoarding
Right now, I would DEFINITELY spend more Bitcoins if I could purchase more things I actually needed rather than simply use them to benefit the market.
Actually, what you are looking for is Stag hunt.
Quote from: wikipedia
The original stag hunt dilemma is as follows: a group of hunters have tracked a large stag, and found it to follow a certain path. If all the hunters work together, they can kill the stag and all eat. If they are discovered, or do not cooperate, the stag will flee, and all will go hungry
Hi,
A prisoner's dilema is a construct in game theory where there are 2 isolated prisoners and both are given the idea that if they testify against the other, they can get away. the dilemma is to cooperate with the other prisoner or to defect against him.
If neither testifies(defects), that is the best outcome for both of them(both cooperate) - there is no evidence. they both go free.
If one testifies (defects) and the other doesn't (cooperates), then the defector gets the good deal and walks free. The cooperator goes to prison.
If both testify, both go to jail.
The stable equilibrium is the one where both defect. (least value to all)
I feel spending bitcoins with merchants today is an example of the prisoner's dilemma. Those who are more well versed with economics and game theory, please correct me if I'm wrong.
If everyone spent coins (both cooperate) that is the best thing for everyone. The economy grows by more merchants entering, seeing the money spent and bitcoin gains prestige as an alternate currency.
If you spend coins, you're spending money that can earn you more of the same tomorrow. But you are cooperating and not defecting.
The people hoarding coins on the other hand are doing the equivalent of defecting by not spending, hoping for some other chump to pay up for the merchant, while their coin gains in value.
If everyone hoards, there is no currency to speak of.
Is this analogy correct? Where are the assumptions wrong?
A prisoner's dilema is a construct in game theory where there are 2 isolated prisoners and both are given the idea that if they testify against the other, they can get away. the dilemma is to cooperate with the other prisoner or to defect against him.
If neither testifies(defects), that is the best outcome for both of them(both cooperate) - there is no evidence. they both go free.
If one testifies (defects) and the other doesn't (cooperates), then the defector gets the good deal and walks free. The cooperator goes to prison.
If both testify, both go to jail.
The stable equilibrium is the one where both defect. (least value to all)
I feel spending bitcoins with merchants today is an example of the prisoner's dilemma. Those who are more well versed with economics and game theory, please correct me if I'm wrong.
If everyone spent coins (both cooperate) that is the best thing for everyone. The economy grows by more merchants entering, seeing the money spent and bitcoin gains prestige as an alternate currency.
If you spend coins, you're spending money that can earn you more of the same tomorrow. But you are cooperating and not defecting.
The people hoarding coins on the other hand are doing the equivalent of defecting by not spending, hoping for some other chump to pay up for the merchant, while their coin gains in value.
If everyone hoards, there is no currency to speak of.
Is this analogy correct? Where are the assumptions wrong?
these aren't prisoners they are defendants/suspects
prisoners are already tried and convicted
thank you for your grammatical input. you're wrong.
actually, a prisoner is anyone who is imprisoned - the reason for or status of that imprisonment is irrelevant. that would include convicts (those who have been convicted), suspects (held by the authorities 'pending charges'), and defendants in those cases where bail has not been granted or is not available.
and the Prisoner's Dilemma is a pretty standard thing, with well-known precepts, if you were (apparently?) unaware of that.
http://en.wikipedia.org/wiki/Prisoner%27s_dilemma
Hi,
A prisoner's dilema is a construct in game theory where there are 2 isolated prisoners and both are given the idea that if they testify against the other, they can get away. the dilemma is to cooperate with the other prisoner or to defect against him.
If neither testifies(defects), that is the best outcome for both of them(both cooperate) - there is no evidence. they both go free.
If one testifies (defects) and the other doesn't (cooperates), then the defector gets the good deal and walks free. The cooperator goes to prison.
If both testify, both go to jail.
The stable equilibrium is the one where both defect. (least value to all)
I feel spending bitcoins with merchants today is an example of the prisoner's dilemma. Those who are more well versed with economics and game theory, please correct me if I'm wrong.
If everyone spent coins (both cooperate) that is the best thing for everyone. The economy grows by more merchants entering, seeing the money spent and bitcoin gains prestige as an alternate currency.
If you spend coins, you're spending money that can earn you more of the same tomorrow. But you are cooperating and not defecting.
The people hoarding coins on the other hand are doing the equivalent of defecting by not spending, hoping for some other chump to pay up for the merchant, while their coin gains in value.
If everyone hoards, there is no currency to speak of.
Is this analogy correct? Where are the assumptions wrong?
A prisoner's dilema is a construct in game theory where there are 2 isolated prisoners and both are given the idea that if they testify against the other, they can get away. the dilemma is to cooperate with the other prisoner or to defect against him.
If neither testifies(defects), that is the best outcome for both of them(both cooperate) - there is no evidence. they both go free.
If one testifies (defects) and the other doesn't (cooperates), then the defector gets the good deal and walks free. The cooperator goes to prison.
If both testify, both go to jail.
The stable equilibrium is the one where both defect. (least value to all)
I feel spending bitcoins with merchants today is an example of the prisoner's dilemma. Those who are more well versed with economics and game theory, please correct me if I'm wrong.
If everyone spent coins (both cooperate) that is the best thing for everyone. The economy grows by more merchants entering, seeing the money spent and bitcoin gains prestige as an alternate currency.
If you spend coins, you're spending money that can earn you more of the same tomorrow. But you are cooperating and not defecting.
The people hoarding coins on the other hand are doing the equivalent of defecting by not spending, hoping for some other chump to pay up for the merchant, while their coin gains in value.
If everyone hoards, there is no currency to speak of.
Is this analogy correct? Where are the assumptions wrong?
these aren't prisoners they are defendants/suspects
prisoners are already tried and convicted
I don't think people are hoarding Bitcoins so much are there are just so few current ways to safely spend them 
You can always by currency, though, and for the time being, that can buy you almost anything...
But yeah, obv it's more convenient to buy the stuff directly without the middle-men etc.
I don't think people are hoarding Bitcoins so much are there are just so few current ways to safely spend them
Those with tens of thousands of coins actually have a strong incentive to spend them, becuase if they don't, and bitcoin fails, they gain nothing. If they spend half, and bitcoins succeeds, then the remaining half is a fortune. Same old; would you rather 100% of nothing or 50% of something big? I think that the more coins you have, the bigger the stakes are to make sure you have the '50% of something big'.
*edit* I guess what I'm getting at is, it's not all or nothing like your example (they dont have to spend all their fortune). I think the equilibrium would be to hedge your bets, which unlike the prisoners dilemma is actually not the worst outcome.
*edit* I guess what I'm getting at is, it's not all or nothing like your example (they dont have to spend all their fortune). I think the equilibrium would be to hedge your bets, which unlike the prisoners dilemma is actually not the worst outcome.
Yep, the fact that you dont have to go either all in or nothing, but can spend just a part and save the rest, makes it different from the prisoners dilema.
This is my plan, so I can show "something".
Every week I will spend/trade/whatever half of my bitcoins (I only have 8, so it's not like it's a big deal)
Every month that bitcoins rise in value, I will "cash" out at the end of the month if they've risen at all, even a dollar, and then start over.
I will always hold on to one, forever, in the off-off-off chance that they ever become worth a million each, at which point I will cash in that remaining one.
So this way, if their value ever plummets, I will have something to show for it. If they rise in value, then obviously that will be better when I do my weekly/monthly sell-offs
I followed this and sold them all off when it hit 30 (all 13 of my coins, heh), and am slowly (very slowly) mining more for each weekly sell-off.
I would have done this if I had 100,000 coins or only 2 coins. Of course I kind of wish I had had 100,000 when it hit 30
Every week I will spend/trade/whatever half of my bitcoins (I only have 8, so it's not like it's a big deal)
Every month that bitcoins rise in value, I will "cash" out at the end of the month if they've risen at all, even a dollar, and then start over.
I will always hold on to one, forever, in the off-off-off chance that they ever become worth a million each, at which point I will cash in that remaining one.
So this way, if their value ever plummets, I will have something to show for it.
If they rise in value, then obviously that will be better when I do my weekly/monthly sell-offsI followed this and sold them all off when it hit 30 (all 13 of my coins, heh), and am slowly (very slowly) mining more for each weekly sell-off.
I would have done this if I had 100,000 coins or only 2 coins. Of course I kind of wish I had had 100,000 when it hit 30
The more valuable bitcoins get, the stronger the incentive to spend them because of the risk that they will lose value in the future. It's the incentive to "lock in" your profits.
For example, a good plan would be to sell or spend 1% of your investment for every 5% rise in price. The one percent is the percentage of what you have left, not your original investment. That way, the value of your hoard goes up, you never run out of bitcoins and you get to spend some too.
For example, a good plan would be to sell or spend 1% of your investment for every 5% rise in price. The one percent is the percentage of what you have left, not your original investment. That way, the value of your hoard goes up, you never run out of bitcoins and you get to spend some too.
Those with tens of thousands of coins actually have a strong incentive to spend them, becuase if they don't, and bitcoin fails, they gain nothing. If they spend half, and bitcoins succeeds, then the remaining half is a fortune. Same old; would you rather 100% of nothing or 50% of something big? I think that the more coins you have, the bigger the stakes are to make sure you have the '50% of something big'.
*edit* I guess what I'm getting at is, it's not all or nothing like your example (they dont have to spend all their fortune). I think the equilibrium would be to hedge your bets, which unlike the prisoners dilemma is actually not the worst outcome.
*edit* I guess what I'm getting at is, it's not all or nothing like your example (they dont have to spend all their fortune). I think the equilibrium would be to hedge your bets, which unlike the prisoners dilemma is actually not the worst outcome.
Hi,
A prisoner's dilema is a construct in game theory where there are 2 isolated prisoners and both are given the idea that if they testify against the other, they can get away. the dilemma is to cooperate with the other prisoner or to defect against him.
If neither testifies(defects), that is the best outcome for both of them(both cooperate) - there is no evidence. they both go free.
If one testifies (defects) and the other doesn't (cooperates), then the defector gets the good deal and walks free. The cooperator goes to prison.
If both testify, both go to jail.
The stable equilibrium is the one where both defect. (least value to all)
I feel spending bitcoins with merchants today is an example of the prisoner's dilemma. Those who are more well versed with economics and game theory, please correct me if I'm wrong.
If everyone spent coins (both cooperate) that is the best thing for everyone. The economy grows by more merchants entering, seeing the money spent and bitcoin gains prestige as an alternate currency.
If you spend coins, you're spending money that can earn you more of the same tomorrow. But you are cooperating and not defecting.
The people hoarding coins on the other hand are doing the equivalent of defecting by not spending, hoping for some other chump to pay up for the merchant, while their coin gains in value.
If everyone hoards, there is no currency to speak of.
Is this analogy correct? Where are the assumptions wrong?
A prisoner's dilema is a construct in game theory where there are 2 isolated prisoners and both are given the idea that if they testify against the other, they can get away. the dilemma is to cooperate with the other prisoner or to defect against him.
If neither testifies(defects), that is the best outcome for both of them(both cooperate) - there is no evidence. they both go free.
If one testifies (defects) and the other doesn't (cooperates), then the defector gets the good deal and walks free. The cooperator goes to prison.
If both testify, both go to jail.
The stable equilibrium is the one where both defect. (least value to all)
I feel spending bitcoins with merchants today is an example of the prisoner's dilemma. Those who are more well versed with economics and game theory, please correct me if I'm wrong.
If everyone spent coins (both cooperate) that is the best thing for everyone. The economy grows by more merchants entering, seeing the money spent and bitcoin gains prestige as an alternate currency.
If you spend coins, you're spending money that can earn you more of the same tomorrow. But you are cooperating and not defecting.
The people hoarding coins on the other hand are doing the equivalent of defecting by not spending, hoping for some other chump to pay up for the merchant, while their coin gains in value.
If everyone hoards, there is no currency to speak of.
Is this analogy correct? Where are the assumptions wrong?
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