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An impossibility theorem on truth-telling in fully decentralised systems

Author

Listed:
  • Rodney Garratt
  • Cyril Monnet

Abstract

We show that truthful reporting about the realization of a publicly observed event cannot be implemented as a unique equilibrium in a completely decentralized environment. Our work provides a theoretical underpinning of the need for oracles and the related "oracle problem".

Suggested Citation

  • Rodney Garratt & Cyril Monnet, 2023. "An impossibility theorem on truth-telling in fully decentralised systems," BIS Working Papers 1117, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1117
    as

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    References listed on IDEAS

    as
    1. Jean Tirole, 1999. "Incomplete Contracts: Where Do We Stand?," Econometrica, Econometric Society, vol. 67(4), pages 741-782, July.
    2. Oliver Hart & John Moore, 1999. "Foundations of Incomplete Contracts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 66(1), pages 115-138.
    3. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    4. Townsend, Robert M., 1979. "Optimal contracts and competitive markets with costly state verification," Journal of Economic Theory, Elsevier, vol. 21(2), pages 265-293, October.
    5. Bergstrom, Ted & Garratt, Rodney & Leo, Greg, 2019. "Let me, or let George? Motives of competing altruists," Games and Economic Behavior, Elsevier, vol. 118(C), pages 269-283.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    decentralized systems; smart contracts; truth-telling; oracle problem;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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