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Institutional Noise, Strategic Deviation, and Intertemporal Collapse: A Formal Model of Miner Behaviour under Protocol Uncertainty

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  • Craig Steven Wright

Abstract

This paper develops a formal game-theoretic model to examine how protocol mutability disrupts cooperative mining behaviour in blockchain systems. Using a repeated game framework with stochastic rule shocks, we show that even minor uncertainty in institutional rules increases time preference and induces strategic deviation. Fixed-rule environments support long-term investment and stable equilibrium strategies; in contrast, mutable protocols lead to short-termism, higher discounting, and collapse of coordinated engagement. Simulation results identify instability zones in the parameter space where rational mining gives way to extractive or arbitrage conduct. These findings support an Austrian economic interpretation: calculability requires rule stability. Institutional noise undermines the informational basis for productive action. We conclude that protocol design must be treated as a constitutional economic constraint, not a discretionary variable, if sustainable cooperation is to emerge in decentralised systems.

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  • Craig Steven Wright, 2025. "Institutional Noise, Strategic Deviation, and Intertemporal Collapse: A Formal Model of Miner Behaviour under Protocol Uncertainty," Papers 2506.20992, arXiv.org.
    • Handle: RePEc:arx:papers:2506.20992
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    1. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582384, December.
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