Vitalik Buterin has a new post about an interesting theoretical attack against Bitcoin. The idea relies on the assumption that the attacker can credibly commit to something quite crazy. The crazy thing is this: paying out 25.01 BTC to all the people who help him in his attack to steal 25 BTC from everyone, but only if the attack fails. This leads to a weird payoff matrix where the dominant strategy is to help him in the attack. The attack succeeds, and no payoff is made.
Of course, smart contracts make such crazy commitments perfectly possible, so this is a bit less theoretical than it sounds. But even as an abstract though experiment about decision theories, it looks pretty interesting.
By the way, Vitalik Buterin is really on a roll. Just a week ago he had a thought-provoking blog post about how Decentralized Autonomous Organizations could possibly utilize a concept often discussed here: decision theory in a setup where agents can inspect each others' source code. It was shared on LW Discussion, but earned less exposure than I think it deserved.
EDIT 1: One smart commenter of the original post spotted that an isomorphic, extremely cool game was already proposed by billionaire Warren Buffett. Does this thing already have a name in game theory maybe?
EDIT 2: I wrote the game up in detail for some old-school game theorist friends:
The attacker orchestrates a game with 99 players. The attacker himself does not participate in the game.
Rules:
Each of the players can either defect or cooperate, in the usual game theoretic setup where they do announce their decisions simultaneously, without side channels. We call "aggregate outcome" the decision that was made by the majority of the players. If the aggregate outcome is defection, we say that the attack succeeds. A player's payoff consists of two components:
1. If her decision coincides with the aggregate outcome, the player gets 10 utilons.
and simultaneously:
2. if the attack succeeds, the attacker gets 1 utilons from each of the 99 players, regardless of their own decision.
There are two equilibria, but the second payoff component breaks the symmetry, and everyone will cooperate.
Now the attacker spices things up, by making a credible commitment before the game. ("Credible" simply means that somehow they make sure that the promise can not be broken. The classic way to achieve such things is an escrow, but so called smart contracts are emerging as a method for making fully unbreakable commitments.)
The attacker's commitment is quite counterintuitive: he promises that he will pay 11 utilons to each of the defecting players, but only if the attack fails.
Now the payoff looks like this:
Defection became a dominant strategy. The clever thing, of course, is that if everyone defects, then the attacker reaches his goal without paying out anything.
I don't know too much about decision theory, but I was thinking about it a bit more, and for me, the end result so far was that "dominant strategy" is just a flawed concept.
If the agents behave superrationally, they do not care about the dominant strategy, and they are safe from this attack. And the "super" in superrational is pretty misleading, because it suggests some extra-human capabilities, but in this particular case it is so easy to see through the whole ruse, one has to be pretty dumb not to behave superrationally. (That is, not to consider the fact that other agents will have to go though the same analysis as ourselves.)
Superrationality works best when we actually know that the others have the same input-output function as ourselves, for example when we know that we are clones or software copies of each others. But real life is not like that, and now I believe that the clean mathematical formulation of such dilemmas (with payoff matrices and all that) is misleading, because it sweeps under the rug another, very fuzzy, hard to formalize input variable: the things that we know about the reasoning processes of the other agents. (In the particular case of the P+epsilon attack, we don't have to assume too much about the other agents. In general, we do.)