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Information Design in Blockchain: A Role of Trusted Intermediaries

Author

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  • Hitoshi Matsushima

    (University of Tokyo)

Abstract

This study clarifies that blockchain cannot replace the strategic value of trusted intermediaries, despite sufficient technological advancement for its implementation. Given the progress expected in the future, this study assumes that blockchain can implement various commitment devices for communication explored in the information design literature, without disclosing their details to anonymous record keepers. By considering revelation incentives explicitly, we show that substituting the verification task of players’ pre-owned private signals with a trusted intermediary can reduce transaction costs in liability, which cannot be achieved non-judicially by blockchain. Hence, trusted intermediaries play a significant role in executing information design through blockchain.

Suggested Citation

  • Hitoshi Matsushima, 2019. "Information Design in Blockchain: A Role of Trusted Intermediaries," KIER Working Papers 1018, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:1018
    as

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    File URL: http://www.kier.kyoto-u.ac.jp/DP/DP1018.pdf
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    References listed on IDEAS

    as
    1. repec:tky:fseres:2019cf1119 is not listed on IDEAS
    2. Dirk Bergemann & Stephen Morris, 2019. "Information Design: A Unified Perspective," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 44-95, March.
    3. Bergemann, Dirk & Morris, Stephen, 2016. "Bayes correlated equilibrium and the comparison of information structures in games," Theoretical Economics, Econometric Society, vol. 11(2), May.
    4. Hitoshi Matsushima, 2019. "Blockchain Disables Real-World Governance," KIER Working Papers 1017, Kyoto University, Institute of Economic Research.
    5. Legros, Patrick & Matsushima, Hitoshi, 1991. "Efficiency in partnerships," Journal of Economic Theory, Elsevier, vol. 55(2), pages 296-322, December.
    6. Dianhui Mao & Zhihao Hao & Fan Wang & Haisheng Li, 2018. "Innovative Blockchain-Based Approach for Sustainable and Credible Environment in Food Trade: A Case Study in Shandong Province, China," Sustainability, MDPI, vol. 10(9), pages 1-17, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Blockchain; Information Design; Verification; Intermediary; Limited Liability;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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