
Self-Enforcing Protocols - gthank
http://www.schneier.com/blog/archives/2009/08/self-enforcing.html
======
jorgeortiz85
_Here’s a self-enforcing protocol for determining property tax: the homeowner
decides the value of the property and calculates the resultant tax, and the
government can either accept the tax or buy the home for that price. Sounds
unrealistic, but the Greek government implemented exactly that system for the
taxation of antiquities. It was the easiest way to motivate people to
accurately report the value of antiquities._

I had an idea a while ago about stopping domain name squatters by using a
similar protocol to price and tax domain names. You'd be required to report
the "fair value" of each domain you owned. All your domains (maybe there could
be exceptions for trademarks) would be implicitly for sale at that fair price.
To keep the reported price from being too high, you'd have to pay some
fraction of that price as a yearly domain name tax. That way, if anyone has a
better use for your domain than you do, they can just buy it from you. Of
course, if you build a brand and a trademark, you should have some protection
from competitors just buying your domain. Maybe only other similar trademark
holders could compete for your domain (eg, Apple Computers and Apple Music
could fight it out to see who gets more value out of apple.com).

~~~
codyrobbins
I think this really perverts the concept of private property, though. In order
to thwart domain squatters, you'd eliminate property rights and create a fluid
pool of domain names that could be forcibly purchased by anyone else at any
time. Domains would become like oiled pool balls so slick and slippery that no
one would be able to keep ahold of them long enough to do anything useful with
them. That is, without massively overpaying taxes on them to insure they
couldn't be taken at any time.

I think one of the most important things about private property is not
necessarily that you can demand its fair value when you sell it, but rather
that you alone can decide whether it is for sale in the first place.

From my way of thinking, domain squatting certainly isn't a dignified way to
make a living or something to be proud of, and it's certainly a pain in the
ass to everyone else, but I think it certainly is within the rights of those
who choose to do it. Who cares if someone has a better use for a domain name?
If you bought it, it's yours whether anyone else like it or not.

You might argue that squatting is not within the rights of those who do it —
according to ICANN regulations — but then I would say that there's already
process in place to resolve those sort of disagreements. Whether there are
issues with that process is another question. That process may be imperfect,
but I think what you are proposing introduces many more problems than it
solves.

~~~
jorgeortiz85
Nonsense. Private property already has all kinds of restrictions. Try this:
First, buy prime commercial real estate in a bustling pedestrian downtown
area. Second, make sure to leave it abandoned, ugly, in a state of general
decay, and plastered with ads just to make sure you make a little money off it
it. (Assume no property taxes.) Third, watch the city council ordinance you
into fixing up the place or leaving it altogether (under threat of fines).

The whole point of community rules on private property is that an ugly or
rundown property will drive down the value of the properties around it. The
same happens with domain names. The reason we have startups with ridiculous
names like Meebo, Loopt, Reddit and Xobni are because all the reasonable names
are taken by squatters who just plaster the domain with ads and make a tidy
profit while they wait for a sucker to hand them over thousands of dollars.

I agree that people legitimately doing business on the web shouldn't face a
constant, ominous threat of seizure. At the same time though, the web could
use some communal standards to make the community better for everyone.

~~~
codyrobbins
Your argument is that because there are already restrictions on private
property, that there should therefore be more. I respectfully but completely
disagree.

I also don't think your analogy is very applicable, since domain names are
just floating in the ether, not sitting in physical proximity of one another.
Ads plastered on one will not drive down the values of the others — the
complete opposite, in fact. Furthermore, no one would buy prime commercial
real estate, do nothing with it, and then be able to cover their costs with
some ads on it — whoever bought it would go bankrupt. Ignoring all that,
however, I really feel that if someone wanted to do so, the city council
should not be able to levy fines on them for letting their property go into
disrepair. Would I want to live next to such a property? No, definitely not.
But it's their property and I respect their rights to do as they wish with it.
I don't feel the ends justify the means in this case.

~~~
jorgeortiz85
No, my argument is that your purist notion of private property doesn't match
reality and isn't a good idea anyway.

You're right that no one would buy prime commercial real estate and do nothing
with it. That's because prime commercial real estate is expensive. But the
prime real estate of the web wasn't expensive. In fact, all of it sold for
just a few bucks back in the 1990s.

Imagine that there was a time when the prime commercial real estate of today
was cheap and squattable in perpetuity. Imagine that a handful of people back
in the 1600s "claimed" the majority of land in the US simply by having seen it
(or, even more aptly in this comparison, by having thought of it). Imagine
that all this land is their "property", regardless of whether they live on it,
work on it, improve it, or even care about it. Under such a system, the
descendants of these handful of people would today be collecting rent from
everyone in the country, whether on prime commercial real estate or otherwise.
Rather than a nation of rugged individuals (think Homestead Act), it'd be a
nation of landed gentry (think British aristocracy).

When it comes absentee landlords, the notion of "property" is rather flimsy.
What right does an absentee landlord have to an abandoned property? The only
thing that maintains an absentee landlord as the "owner" of a property is the
government's willingness to use force against anyone who claims otherwise.

------
ube
How can you not like an article that involves cake, pirates, and property
taxes?

One thing that I wonder is how is a self reinforcing transaction affected when
the third parties that used to mediate it are shut out. For example,
certificate authority companies that are no longer needed.

Furthermore, the "all hands" in the room as opposed to secret ballot voting -
while on the surface it is self reinforcing from a social perspective it
wouldn't really work (i.e. the coercion he mentioned and also the lemming
effect where someone votes with their crowd delaying raising their hand just
enough to see what the consensus is).

Finally, the collusion and breakage of a self-reinforcing system like the
pirate example shows that a self-reinforcing protocol is situationally
dependent. What are the chances that at least one pirate will collude with the
captain? (I bet the chance is quite high considering the nature of pirates) As
opposed to the property tax example which seems to be a very good use of such
a protocol.

~~~
niyazpk
Instead of giving the amount to the captain, they could throw it away to the
sea. Nobody would cheat then.

In real life situations, you may want to replace the _sea_ by the government
or some kind of common fund in the domain.

~~~
eru
> Nobody would cheat then.

Depends. Perhaps somebody would try to bully (i.e. play a game of chicken
<http://en.wikipedia.org/wiki/Chicken_(game)>): "Either you lower your share
in my favour, or I will claim too much and you get nothing."

~~~
billswift
It wouldn't work if it was explicitly known. The others could just as easily
decide to cut him out of the distribution entirely.

~~~
eru
Yes. Or if the victim could commit to not yielding to threats like this
beforehand. Being able to commit oneself is of huge importance in games like
chicken (<http://en.wikipedia.org/wiki/Chicken_(game)>).

------
Locke
Cut-and-choose is known as the "pie rule" in the abstract gaming world.

For games with a clear first move advantage the pie rule is sometimes applied
to balance the game. The first player moves, and the second player then has a
choice of continuing the game or switching sides. It is therefore in the best
interests of the first player to choose a fair move.

Naturally, this only works if the first move possibilities include moves that
range from good to bad.

Still, it's a nice example of a meta rule that can be applied to most games.

~~~
ionfish
It's often cited in political philosophy as an example of a fair procedure.

------
bockris
In the comments: [http://www.schneier.com/blog/archives/2009/08/self-
enforcing...](http://www.schneier.com/blog/archives/2009/08/self-
enforcing.html#c387837)

someone brings up the situation where there is only one item (Grandma's
antique mirror) and how you can use the shotgun clause to determine who gets
the item.

I'm reminded of the chapter (70) in Cryptonomicon where they were dividing the
assets of an estate. All of the children got to rank items on 2 scales,
emotional attachment and dollar value. The choices on both axes were scaled to
between 0 and 1. Then they were going to use software to determine an equal
split on both scales amongst all recipients.

~~~
huhtenberg
> _The choices on both axes were scaled to between 0 and 1._

 _That_ I don't remember, but I do remember that they had sex on one of the
furniture items in question :)

~~~
bockris
different chapter (41) and it was Tom Howard, not Randy who had sex on a Gomer
Bolstrood dresser.

(The reason I can quote chapters is that I have an OCR'ed scan of the book
that I found on the internet. a quick search on the word 'stockings' found the
right chapter.)

------
codyrobbins
_Here’s a self-enforcing protocol for determining property tax: the homeowner
decides the value of the property and calculates the resultant tax, and the
government can either accept the tax or buy the home for that price. Sounds
unrealistic, but the Greek government implemented exactly that system for the
taxation of antiquities. It was the easiest way to motivate people to
accurately report the value of antiquities._

Yeah, it does sound unrealistic. What if the homeowner truthfully and in good
faith reports an accurate value for their home, and the government decides to
purchase it anyways? I would not like the government to have the ability to
instantly render me homeless.

~~~
run4yourlives
_What if the homeowner truthfully and in good faith reports an accurate value
for their home, and the government decides to purchase it anyways?_

That assumes that the government can't already do this. They most certainly
can. Even better, they can do stupid things like build High-tension powerlines
the next lot over, rezone your lot into industrial, etc, etc.

This doesn't really give the government any more power, but it removes a lot
of red tape, plus it ensures you get fair market for your home.

Assuming you over-report the value, you'd be making a profit on the sale -
enough that moving wouldn't be much of a issue for you.

It's actually quite brilliant as it has the effect of raising taxes! If my
home is market valued at $500K, I'd probably suggest I pay taxes on $550K,
just so that I'd have that extra $50K in pocket if I'm inconvieneced.

~~~
codyrobbins
Sure, the government can already do this, but certainly not so easily. Things
like building high-tension powerlines or rezoning require many steps involving
proposals, reviews, environmental impact studies, community input, etc. before
final approval. There's also eminent domain, which I didn't mention, but again
even that requires lots of review, justification, general consensus, and
approval.

There is definitely a difference between those things and the government being
able to arbitrarily seize your property with no justification at all, other
than that you've arguably undervalued it, regardless of whether they pay you
what you valued it at.

So, while this may not really give the government power that it doesn't
already have per se, what it's doing is removing a ton of barriers.

 _Assuming you over-report the value, you'd be making a profit on the sale -
enough that moving wouldn't be much of a issue for you._

This is assuming that all you care about is money. What if you don't want to
give up your home regardless of how much they pay you for it? There are some
things people are not willing to sell for any price. And being forced to
relocate would be far more than an inconvenience to some people. In these
cases, how much should you be forced to overvalue your home by as insurance
that the government won't arbitrarily seize it if you get on someone's bad
side? 25%? 50%? 200%?

~~~
run4yourlives
Again, this doesn't give the government any more power than it already has. If
they want your home, they will seize it.

Arguing that the government needs to jump through hoops is some sort of
defence to you isn't relevant. They can and do jump through those hoops all
the time, and home-owners are left with assessed values that certainly don't
reflect the value of the home _to them_.

In the Greek system, the home-owner can arbitrarily decide what their home
means to them, by assigning a value to it themselves. I'm not sure how you
take this to mean that the government will suddenly decide to buy up
undervalued homes throughout the city. That doesn't make any sense. The
government is not a real estate firm, and there is no benefit to them or the
taxpayers to saddle themselves with property instead of taking a short of a
few hundred dollars, which they will more than make up from people who _do_
value their homes. They'll continue to act as they always have, Rezoning and
developing as they see fit. In this case however, people will be offered fair
value for their homes - fair, because they've priced the house themselves.

So to answer you question, if your house is truly worth so much to you that
you would be crushed if the government decided to build a highway where you
live, yes, you do price it a 200% (and pay the taxes as such). The Greek
system gives you this choice. Under current North American systems, you'll get
the assessed value and be told to bugger off. If you're really lucky this will
happen during a recession when your assessed value is lower and most
construction projects occur. If you're really, really lucky they'll build
something next to your lot, force you to take them to court, then offer to
settle at the _new, post development_ assessed price.

The Greek system wins in my mind in all cases where a government would look to
seize property from an owner.

~~~
donaldc
_Arguing that the government needs to jump through hoops is some sort of
defence to you isn't relevant. They can and do jump through those hoops all
the time, and home-owners are left with assessed values that certainly don't
reflect the value of the home to them._

Of course it's relevant. The easier it is for the government to snap up any
property it feels like on a whim, the more frequently this will happen. The
fact that it is sometimes useful and necessary for the government to exercise
eminent domain doesn't mean there shouldn't be restrictions.

------
chrisduesing
I would love to hear an idea for how this could be used in an online gaming
situation.

1\. Imagine a simple turn based rpg combat system where each side rolls a hit
die and the other side a block die and then they compare. given this premise,
what needs to be modified to prevent cheating?

2\. Once 1 is solved, how much does a fps situation where network lag effects
player's perception of each others location complicate the procedure?

~~~
te_platt
You might want to check out Applied Cryptography by Bruce Schneier. It
explains how to dice as well as cards over a network without being able to
cheat. It also goes into many other areas in great detail.

~~~
chrisduesing
I just checked the book using Amazon's "look inside" feature. It appears that
his example is how to use cryptography to hide what cards you have from the
other player until it is time to reveal them. I am more interested in how to
apply the ideas from this article to involve an open, self enforcing protocol
rather than data hiding.

~~~
lonestar
<http://en.wikipedia.org/wiki/Coin_flipping>

See the section "Coin flipping in telecommunications" for a cryptographic
scheme for verifiable coin flipping across the internet. This is a specific
example from the category of commitment schemes.

------
Herring
Anyone remember the protocols for 3+ people dividing the cake? I cant find the
article I saw.

Edit: Still can't find the article, but wikipedia mentions the relevant
research papers. <http://en.wikipedia.org/wiki/Cake_cutting>

~~~
sethg
IIRC the protocol for a three-way split is: One party gradually moves the
knife, pointing downward and poised to slice, over the surface of the cake,
until either of the other two says "cut". The person who calls "cut" gets that
slice. The remainder of the cake is divided according to the cut-and-choose
protocol.

~~~
pavel_lishin
Wouldn't the two people not cutting wait 'til the knife was in the middle, and
then try to yell 'cut!' as fast as they could? First person to yell "cut"
would get half of the cake, and the other two would get a quarter apiece...

~~~
nostrademons
All parties can say cut, including the cutter. If he calls it, he gets the
part behind the knife, just like any of the others.

In the above scenario, the cutter has an incentive to yell cut as soon as the
knife passes the 1/3 point, then each of the remaining people has an incentive
to yell cut when it's passed half of the remainder (or 1/3 of the total).

------
pkulak
"an open show of hands in a room -- one that everyone in the room can count
for himself -- is self-enforcing"

This is his second example (where you can complain to someone else if it's
unfair) which he just got done saying _wasn't_ self-enforcing. Sure I can
count for myself, but if the official number is not my own, I need a third
party.

~~~
sketerpot
Plus you can vote for more than one candidate. This is a _good_ thing, I think
-- approval voting is a very well-behaved voting system -- but perhaps not
what people were trying to do.

<http://en.wikipedia.org/wiki/Approval_voting>

------
makmanalp
_Self-enforcing protocols are safer than other types because participants
don't gain an advantage from cheating._

 _Barter is a self-enforcing protocol: nobody needs to facilitate the
transaction or resolve disputes. It just works._

Except when bartering, participants _do_ gain an advantage from cheating.

~~~
wwalker3
And it's easy to cheat in bartering -- just don't tell the other party that
your goods have some hidden flaw.

If I barter you my old laptop that crashes when you leave it on more than an
hour, you're going to be mad later when you find out I didn't tell you, and
you'll have to appeal to a third party for justice if I'm bigger or stronger
than you.

~~~
billswift
Bigger or stronger won't stop a bullet. Anyone who cheats in a way that
seriously damages the other, in a world that has guns in it, is a f*cking
idiot.

EDIT: This is known as "deterrence" if the potential malefactor is fairly
bright and "evolution in action" if not.

