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Governance with a token

So bringing some recent threads together – this video includes a discussion about crypto currencies and governance:

  • Taking a lead from game theory – let’s say that the rules of the game define how economic value is shared across participants, and that governance defines the way these rules can be changed.
  • In the capitalist economy – money facilitates the transfer of value, the profit motive determines how value is distributed, while the power to change the rules resides with capital (ie. shareholders).
  • In the crypto-space – we can have tokens that combine value transfer with governance such that the more people that use a system, the wider the distribution of tokens and the more people that have a say in governance.

Suggests a value-in-use approach to governance where you can “distribute power more evenly across the network because everyone is sharing the same asset” – as currency and capital are combined. Power is distributed based on how everyone is contributing to the network.

Under this model, the aim is to reward participation with the power to govern. Governance becomes a mechanism to protect against being “forked to death” as the value to govern accretes to those that work within the structure. A well designed governance mechanism will therefore better enable a network to evolve over time.

Also, suggests that models that reward participation are likely to be more robust than ICO’s where external capital gets to buy power up-front – which just internalises the governance problems that exist with proportional shareholder models elsewhere.

Got me wondering how a currency & capital token simplifies the management of a mutual…


 

Co-operatively solving the prisoner’s dilemma

Co-operatively solving the prisoner’s dilemma

Listening to a back edition of Seth Godin’s Akimbo podcast “Game Theory & the Infinite Game”, it struck me that a co-operative is, by design, an attempt to collectively escape the prisoner’s dilemma.

To recap the parameters of the ‘game’, two people are caught red-handed for a crime. They are going to serve a year’s jail-time for this. But they are wanted for a bigger crime too. So they are each offered a way out of jail-time, rat on your partner for the bigger crime and you will go free but your partner will get 50 years. The trouble is that if they both sing, then they will both get 5 years.

The expectation is that the rational selfish response will be to rat on the other. In practice, humans have demonstrated a systemic bias to co-operate – we seem to understand that the pursuit of single-minded self-interest can lead to a bad outcome for all.

So now I have added The Evolution of Cooperation by Robert Axelrod to my reading list (here for the abridged version). This book reports on a Prisoner’s Dilemma tournament where he invited game theory experts to submit programs that would be paired off against each other to see which did best over repeated interactions.

“Amazingly enough, the winner was the simplest of all candidates submitted.
This was a strategy of simple reciprocity which cooperates on the
first move and then does whatever the other player did on the previous
move.”

He called it the Tit-for-Tat strategy.

By analysing the top-scoring strategies, Axelrod stated several conditions necessary for a strategy to be successful:

  • Nice – Almost all of the top-scoring strategies were nice, that is, it will not defect before its opponent does.
  • Retaliating – A successful strategy must not be a blind optimist. It must sometimes retaliate to avoid being exploited by others..
  • Forgiving – Though players will retaliate, a successful strategy will once again fall back to cooperating if the opponent does not continue to defect. This stops long runs of revenge and counter-revenge.
  • Non-envious – The best strategies did not strive to score more than the opponent.

Whether the players trust each other or not is less important in the long run than whether the conditions are ripe for them to build a stable pattern of cooperation with each other. The successful strategy learns through trial-and-error that it is better to co-operate than not.

Some lessons here for co-operative design!

What is good data governance?

What is good data governance?

Governance is a hashtag that has been growing in popularity.  So it’s great to see the coop sector responding with the BCCM’s impending release of Co-operative and Mutual Enterprise Governance Principles for the Australian co-op and mutual sector. And folk like Coop News dedicating a Governance Edition to analyse the subject.

We’re interested in how this emerging thinking applies to data.

Data governance is the mechanism through which values and expectations with respect to data can be translated into effective management practices.

Good governance is a function of the clarity of shared intent and trust in expected behavior. As Dee Hock writes: “This is not to say that contracts, laws, and regulations do not serve a purpose. Rather it is to point out that…rules and regulations, laws and contracts, can never replace clarity of shared purpose and clear, deeply held principles about conduct in pursuit of that purpose.”

By these definitions, good data governance is broader than legal frameworks or codes of practice – it bridges the gap between the expectations and values that folk have with respect to their data, and the mechanisms by which these are made tangible. It encompasses legal documentation and decision-making protocols that are agreed between the actors involved. And it includes the social interactions that enable these to be made real.

The Cambridge Analytics seraglio exposed the under-belly of the market that preys on our data. And the GDPR has done wonders for focussing attention on data management practices. Next step is to get some clarity around the governance practices that will lay the foundation for better matching of expectations with practice.

PS – An example of a emerging model for personal data, Sovrin have a pretty comprehensive Trust Framework