Jason W Solinsky <solman@MIT.EDU> writes:
Enter Ingve the insurance salesman. Ingve will guarantee to others that you are certified by Charles by offering them bets. So suppose that Microsquish sends you its advertising agent and the agent is offering a 10 nano-slinkys [a cyberspatial monetary unit] bonus if you can produce one of Charles's certifications. Charles is charging 8 nano-slinkys. In steps Ingve. You've told Ingve that you are certified by Charles as a frequent purchaser of big brother inside computers. So Ingve says: "I'll convince Microsquish to accept my word that you have Charles's certification in exchange for just four nanoslinkys. But if at my request you ask for the certification and Charles's says you aren't certified then you owe me 64 nano-slinkys." Since you are sure that you are certified you accept the deal. Then Ingve goes to Microsquish and offers to insure your certification. Each time Microsquish accepts a certification from Ingve for you, Ingve will pay Microsquish 2 nano-slinkys but will be able to get your business (and thus offset that with the four nano-slinkys). But, if it turns whenever Microsquish wants to it can check up on your certification from Charles at cost (8 nano-slinkys). If Charles certifies you all is well. Otherwise, you owe Ingve 64 nano-slinkys and Ingve has to pay up Microsquish's insurance claim (which could be quite large depending on the policy.
One thing I don't follow here is under what circumstances a "challenge" will occur. Presumably Microsquish will not blindly accept all of Ingve's assurances since they are backed only by promises. Can Microsquish force Ingve to go to his clients and make them produce certificates? Who pays for that? Maybe if you factor in that cost it won't look so bad for Charles. Also, just because Charles can't get what he wants for his certifications doesn't mean he is being cheated. It's a market, after all. You could just as well say that somebody else opens up a certification shop that sells certifications just like Charles' for less. It's not the fault of the protocol that Charles' business dries up. If the value of his certifications drops (as in your scenario) then his business should decrease. Last, I'd say your problem exists just as clearly without Ingve. You could make a deal with Microsquish promising that you would be able to get certifications if asked, with some agreed-upon procedure by which Microsquish could demand that you produce one, with appropriate penalties. In that case probably Microsquish would believe some percentage of people and Charles' business would again fall off. In practice Ingve might be useful to help even up fluctuations but the problem arises just as clearly without him. You might look at it in terms of a priori vs a posteriori probabilities that you do in fact have the ability to gain a certification. If Microsquish was inclined to believe you before (say, because you had demonstrated good faith in the past), then the exhibition of an actual certificate is less valuable to Microsquish because it adds less information. So it makes sense that certificate challenges, with their associated costs to you and Microsquish, would occur less frequently in that case. Again, it appears that the situation is simply reflecting market values of information. Hal