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From: William Morriss <wjmelements@gmail.com>
Date: Wed, 29 Nov 2017 22:05:02 -0800
Message-ID: <CADpM8jrOfjCaHAu97MGaaAouYootyBCwuBw1fvay0zK8pnwRVg@mail.gmail.com>
To: Chenxi Cai <Chenxi_Cai@live.com>
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Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists.linuxfoundation.org>
Subject: Re: [bitcoin-dev] BIP Idea: Marginal Pricing
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--089e08230f906cb3b3055f2d081a
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On Wed, Nov 29, 2017 at 9:52 PM, Chenxi Cai <Chenxi_Cai@live.com> wrote:
> Hi All,
>
>
> Auction theory is a well-studied problem in the economics literature.
> Currently what bitcoin has is Generalized first-price auction, where
> winning bidders pay their full bids. Alternatively, two approaches are
> potentially viable, which are Generalized second-price auction and Vickre=
y=E2=80=93Clarke=E2=80=93Groves
> auction. Generalized second-price auction, where winning bidders pay thei=
r
> next highest bids, reduces (but not eliminate) the need for bidders to
> strategize by allowing them to bid closer to their reservation
> price. Vickrey=E2=80=93Clarke=E2=80=93Groves auction, a more sophisticate=
d system that
> considers all bids in relation to one another, elicit truthful bids from
> bidders, but may not maximize miners' fees as the other two systems will.
>
>
> Due to one result called Revenue Equivalence, the choice of fee design
> will not impact miners' fees unless the outcomes of the auction changes
> (i.e, the highest bidders do not always win). In addition, the sole benef=
it
> of second-price auction over first-price auction is to spare people's
> mental troubles from strategizing, rather than actually saving mining fee=
s,
> because in equilibrium the fees bidders pay remain the same. Therefore, i=
n
> balance, I do not see substantial material benefits arising from switchin=
g
> to a different fee schedule.
>
>
> Best,
>
> Chenxi Cai
>
>
Changing the bidding system to the marginal price allows us to supersede
the block size limit, which changes the outcome of the auction, as
different transactions are included.
--089e08230f906cb3b3055f2d081a
Content-Type: text/html; charset="UTF-8"
Content-Transfer-Encoding: quoted-printable
<div dir=3D"ltr"><div class=3D"gmail_extra"><div class=3D"gmail_quote">On W=
ed, Nov 29, 2017 at 9:52 PM, Chenxi Cai <span dir=3D"ltr"><<a href=3D"ma=
ilto:Chenxi_Cai@live.com" target=3D"_blank">Chenxi_Cai@live.com</a>></sp=
an> wrote:<br><blockquote class=3D"gmail_quote" style=3D"margin:0px 0px 0px=
0.8ex;border-left:1px solid rgb(204,204,204);padding-left:1ex">
<div dir=3D"ltr">
<div id=3D"gmail-m_8403313716500134774divtagdefaultwrapper" style=3D"font-s=
ize:12pt;color:rgb(0,0,0);font-family:Calibri,Helvetica,sans-serif" dir=3D"=
ltr">
<p style=3D"margin-top:0px;margin-bottom:0px">Hi All,</p>
<p style=3D"margin-top:0px;margin-bottom:0px"><br>
</p>
<p style=3D"margin-top:0px;margin-bottom:0px">Auction theory is a well-stud=
ied problem in the=C2=A0economics=C2=A0literature. Currently what bitcoin h=
as is Generalized first-price auction,=C2=A0where winning bidders pay their=
full bids. Alternatively, two approaches are potentially
viable, which are Generalized second-price auction and=C2=A0<span>Vickrey=
=E2=80=93Clarke=E2=80=93Groves auction.=C2=A0Generalized second-price aucti=
on, where winning bidders pay their next highest bids,=C2=A0reduces (but no=
t eliminate) the need=C2=A0for bidders to strategize by allowing them
to bid closer to their reservation price.=C2=A0Vickrey=E2=80=93Clarke=E2=
=80=93Groves auction, a more sophisticated=C2=A0system that considers all b=
ids in relation to one another, elicit truthful bids from bidders, but may =
not maximize miners' fees as the other two systems will.=C2=A0</span></=
p>
<p style=3D"margin-top:0px;margin-bottom:0px"><br>
</p>
<p style=3D"margin-top:0px;margin-bottom:0px">Due to=C2=A0one result called=
=C2=A0<span>Revenue Equivalence, the choice of fee=C2=A0design will not imp=
act miners' fees=C2=A0unless the outcomes of the auction changes (i.e, =
the highest bidders do not always win). In addition, the sole
benefit of second-price auction over first-price auction is to spare peopl=
e's mental troubles from strategizing,=C2=A0rather than actually saving=
mining fees, because in equilibrium the fees bidders pay remain the same. =
Therefore, in balance, I do not see substantial=C2=A0material=C2=A0benefits
arising from switching to a different fee schedule.=C2=A0</span></p>
<p style=3D"margin-top:0px;margin-bottom:0px"><span><br>
</span></p>
<p style=3D"margin-top:0px;margin-bottom:0px">Best,</p>
<p style=3D"margin-top:0px;margin-bottom:0px">Chenxi Cai</p>
<br></div></div></blockquote><div><br></div><div>Changing the bidding syste=
m to the marginal price allows us to supersede the block size limit, which =
changes the outcome of the auction, as=20
different transactions are included. <br></div></div></div></div>
--089e08230f906cb3b3055f2d081a--
|
