Game Theory and Mathematical Economics Research Seminar

 

Lecturer: 

Prof. Noam Nisan (Hebrew University)

Title: 

Serial Monopoly on Blockchains.

Abstract: 

In the first half of this talk I will give a general introduction to Blockchains and their Transaction Fee Mechanisms. I will then talk about a recent paper of mine that is motivated by Blockchains where “miners” are serially given the monopoly for assembling transactions into the next block. 

The model has a single good that is sold repeatedly every day where new demand for the good arrives every day. The novel element in the model is that all unsatisfied demand from one day remains in the system and is added to the new demand of the next day. Every day there is a new monopolist that gets to sell a fixed supplys of the good and naturally chooses to do soat the monopolist’s price for the combined demand. What will the dynamics of the prices chosen by the sequence of monopolists be? What level of efficiency will be obtained in the long term? We start with a non-strategic analysis of users’ behavior and our main result shows that prices keep fluctuating wildly and this is an endogenous property of the model and happens even when demand is stable with nothing stochastic in the model. These price fluctuations underscore the necessity of an analysis under strategic behavior of the users, which we show results in the prices being stable at the market equilibrium price.

Location: 

Eilan Hall, Feldman Building, Second Floor, Edmond Safra Campus.

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