As the size of a group increases and the number and complexity of decisions facing the group increases it becomes increasingly difficult to coordinate effectively. There are many possible explanations for why this occurs but at a high level the problem can be summarized as follows:
- The burden of making effective decisions increases with the volume and complexity of decisions that need to be made.
- An Individual’s impact on the result of a decision decreases as the size of the group grows.
From an individual/microeconomic perspective this leads to rational ignorance, where the costs of actively evaluating all decisions, coming to an informed opinion, and ultimately participating in the governance process outweigh the expected benefits. In practice this often leads to low voter turn-out, and relatively careless voting based on emotional reactions and minimal research.
A naive solution would be to pay people to participate in an effort to make the expected value higher than the cost. Unfortunately, this may increase participation but does not actually incentivize researching issues carefully, instead pushes users to vote negligently.
A less naive approach is used by TCRs and other Schelling based voting games, where users are rewarded only if they end up in the majority and are punished if they end up in the minority. This creates an incentive to carefully evaluate options and predict what the group consensus is. Putting aside complications related to bribery, credible commitments, and other strategies that might influence the equilibria of such a system, the pattern creates an economic incentive for participants to vote for the option that they believe align best with the group rather than vote solely based on their personal preferences.
Combining a Schelling-based voting game with Sortition can allow a subset of participants to reach the same conclusion as a larger group since individual participants cannot assume which subset of the group has been chosen and therefore should assume the random sample is representative of the larger group. This is how the proposed Aragon Court mechanism enables disputes to be settled cheaply, by only requiring a small sample of jurors to resolve a dispute.
However, often there are decisions which would ideally be made by a sub-group of specialists on behalf of a larger community. In such a case a Schelling mechanism would only incentivize participants of the sub-group to pick preferences that align with the preferences of the other specialists within the sub-group, and not necessarily with the larger community.
A possible solution, proposed in the draft whitepaper, is to use the Court mechanism as a way to anchor community values and expectations on subsets of users who choose to participate in different aspects of network governance. For example to participate in governance over the Networks discretionary funds a participant would need to collateralize an agreement using ANT, the agreement would define a code of conduct that could prohibit obvious abuses of authority and set other expectations. In the event that the participants actions do not align with the agreement, anyone can create a dispute and put the offending parties collateral at risk. In exchange for taking on this risk the network would compensate participants for taking on the risk and opportunity cost of participating in the network. This essentially means we are able to pay people to govern the network, while ensuring even if there is only a small subset of the group participating they are generally held accountable to the network as a whole.