Assurance contracts

Here is an excellent Wikipedia entry.  Here is my favorite part:

Dominant Assurance Contracts, created by Alex Tabarrok, involve an extra component – if a quorum is not formed, every contributor is not only released from the pledge, but is given a bonus. Tabarrok asserts that this creates a dominant strategy, which means that in a game-theory decision matrix, it is always the best move for someone considering whether to pledge or not, no matter what other players do.

Thanks to Travis Corcoran for the pointer.  Here is another Wikipedia entry, though it cries out for some additional work…


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