Using Blockchain to Improve Decision Making That Benefits the Public Good

Abstract

Human decision making is often prone to biases and irrationality. Group decisions add dynamic interactions that further complicate the choice process and frequently result in outcomes that are suboptimal for both the individual and the collective. We show that an implementation of a Blockchain protocol improves individuals' decision strategies and increases the alignment between desires and outcomes. The Blockchain protocol affords (1) a distributed decision, (2) the ability to iterate repeatedly over a choice, (3) the use of feedback and corrective inputs, and (4) the quantification of intrinsic choice attributes (i.e., greed, desire for fairness, etc.). We test our protocol's performance in the context of the Public Goods Game. The game, a generalized version of the Prisoner's Dilemma, allows players to maximize their own gain or act in ways that benefit the collective. Empirical evidence shows that participants' cooperation in the game typically decreases once a single player favors their own interest at the expense of others'. In our Blockchain implementation, "smart contracts" are used to safeguard individuals against losses and, consequently, encourage contributions to the public good. Across different tested simulations, the Blockchain protocol increases both the overall trust among the participants and their profits. Agents decision strategies remain flexible while they act as each other's source of accountability (which can be seen as formalized distributed "Ulysses contract"). To highlight the contribution of our protocol to society at large we incorporated an entity that represents the public good. This benevolent independent beneficiary of the contributions of all participants (e.g., a charity organization or a tax system) maximized its payoffs when the Blockchain protocol was implemented. We provide a formalized implementation of the Blockchain protocol and discuss potential applications that could benefit society by more accurately capturing individuals' preferences. For example, the protocol could help maximize profits in groups, facilitate democratic election that better reflect the public opinion, or enable group decision in circumstances where a balance between anonymity, diverse opinions, personal preferences and loss-aversion play a role.

Knowledge engineering–based DApp using blockchain technology for protract medical certificates privacy

“…Cerf et al. [46] designed a decision strategy‐based blockchain protocol that improves alignment among the desires and outcomes of the system. The authors have tested the proposed design system by considering the public goods game.…”

The role of blockchain technology in the process of decision-making in human resource management: a review and future research agenda

“…Because of distributed ledger technology, the professionals felt more comfortable recruiting and sectioning without the use of incorrect credentials. The complexity of selecting new criteria, such as performance metrics (Kremer, 2018;Pillai and Sivathanu, 2021), employee engagement (Pal et al, 2016), work-life balance (Casino et al, 2019) and employee retention (Hofmann and Stokburger-Sauer, 2017), was the key issue that was challenging to handle with the current technique of maintaining HR records in HRM (Alharby et al, 2018;Cerf et al, 2020;Olivas-Lujan, 2019). Thus, the parameters can be assessed using blockchain, and appropriate decisions can be taken.…”

“…Since the decision-maker has direct control over the decision-making process, individual biases or judgment, and rationalization are frequently prevalent in administrative and managerial choices, particularly those involving human resources (Rikken et al, 2019;Tapus and Manolache, 2019;Cerf et al, 2020). Technology plays the key role in solving the issue of individual biases or judgment, and rationalism (Islam et al, 2012).…”

Blockchain Applications to Improve Operation and Security of Transportation Systems: A Survey

“…As a potential solution to such group-based operation problems, blockchain has emerged and been employed in common group-based exercises to test its ability to govern such interactions. For example, an experiment that was conducted by Moran Cerf, Sandra Matz, and Aviram Berg, which incorporated its use into a Public Goods game, showed that its use of Smart Contracts allowed operating entities to understand and take opportunities that yielded better results [122]. Under different rule sets, this logical operation could be applied to vehicle systems as well, allowing them to avoid collisions and operate optimally on the road, securing the safety of all group entities and their passengers.…”