Life & Research Notes

In writing the background section of my Promiserver thesis, I’ve recently spent some time reading and thinking about promises and the relation to trust and social systems. I think of a promise as a relationship among participants who trust one another to make good on certain pre-specified goals and conditions. The foundation of this trust is the promise institution: the context in which a promise is made, and the methods by which it is enforced. (I grokked this idea of promise institutions from perusing the first few chapters of F.H. Buckley’s Just Exchange.)

Consider a basic laissez-faire market model in which each party tries to maximize its own gain, and in which their is no trust between the parties. There will be many cases like the Prisoners’ Dilemma in which cooperation is the optimal group strategy, but the individual strategy is uncooperativeness. A promise institution can change these outcomes, aligning the individual’s best interest with the group’s. As an outside force acting on the participants, the institution uses some condoned enforcement mechanism to deter breach of promise and incentivize cooperation.

The character of the promise institution may vary considerably. We can divide the set of institutions into two core classes of social and legal. Each operates differently, yet they overlap considerably in their scope. We rely on the social promise institution when we make promises with friends or family, or within a community. These are agreements that we would never expect to go to court. The social promise institution uses emotional, interpersonal, and community enforcement, such as gossip, guilt, shaming, or decrease in standing or reputation.

We invoke the legal promise institution in matters of government or business, where the social enforcement lacks sufficient scope or strength to ensure cooperation. The legal institution offers the greater trust firepower needed to deal with corporations and governments, yet at a cost of higher barrier to entry and far greater stakes. Participating in a legally binding contract generally often involves lawyers, fees and time for at least one party, and potentially severe legal ramifications for breach.

Promiserver lives in the social end of the spectrum, but cautiously dips its toes into legal territory. Enforcement is reputation based—clearly the social promise institution—but it aims to extend social enforcement further into the space in which people would traditionally feel the need to turn to the legal institution.

These promise institutions are critical, to both life and business. The more we trust the accuracy and efficacy of the institutions, the more we may trust in the promises we make. If I trust my community and feel they are fair and reasonable, I am more likely to make a social promise. If I feel the legal system is fair and reasonable, the more trust I place in the contracts I sign. In either case, good institutions incentivize cooperation.

Yet these institutions are not owned by any person, company, or government. They are created and owned by all of us as members and participants. Though at times the individual best interest may run counter to the enforcement laid out by the institution, the purpose of the promise institution is to protect the best interests of the group as a whole. If a corporation bribes a judge, thereby corrupting the legal institution, it may temporarily serve the best interest of that corporation, but in the long run it hurts everyone because it adversely affects our trust in the institution. This sort of “fragile, owned by everyone, benefits everyone” resource is classically referred to as the commons.

This line of thinking has reaffirmed for me that Promiserver is dabbling within a critical space. I’m currently reading Peter Barnes’s interesting Capitalism 3.0, which makes a case for creation of new policy to protect endangered commons like the environment using market incentives, and has me interested in how we approach other, intangible commons. So I’ve stepped onto this ride that is my thesis. It’s been a little slow and creaky on the uphill, but it is leading to something, and I see some interesting curves approaching.

Recent PLW graduate Burak’s latest project is up online. He is pushing ahead with some work in experimental art market models, all leading up to a live event featuring sensors, live video feeds, and the city of Oklahoma (as well as Boston, Istanbul, and Munich). See Burak’s description on the OS Blog, and the live site, A Stock Market in Life.

Another recent grad, Kelly has been busy settling into Google’s team in Atlanta, and recently releasing Google Web Toolkit (GWT) for the Mac. GWT is a package for developing rich AJAX applications in Java. Your Java code compiles into compact and efficient Javascript. He has a more accurate and helpful description on Google Mac blog. Nice work Kelly.

Raph Koster, author of Theory of Fun which we read in Henry’s class, has a short, thoughtful piece on the economic and social effects of CopyBot, a hack on Second Life that allows people to duplicate any object. His conclusion is in line with some of the discussion lately here in the PLW:

Microtransactions for digital assets and virtual goods is a rising, potentially multibillion dollar industry. To succeed, entrepreneurs who are building networked systems based on user content . . . must realize that anything displayable is copyable; the value lies instead in service and in server-side functionality. Content is like songs around a campfire: destined to be enjoyed for free. Those who build businesses around hosting campfires would be wise to focus on making the campfire experience great, rather than charging listeners by the song. (full article)

In designing OPENSTUDIO we’ve experimented with simple models for small transactions trading in digital content, and to a lesser extent with the same for exchange of services. On the content side we’ve found ourselves wandering into the territory of DRM, licenses, creative commons, and participatory media. These are all relevant data points in a struggle to understand how to define ownership of digital media that is both effortlessly copyable yet paradoxically often fleeting and ephemeral.

I’m working in contracts as an attempt to understand the service side, to decouple services from any specific economic systems, communities, mediums, or infrastructures, and to create the standalone endpoint at which people come together to create and bind themselves to their own lightweight, private laws written in the community’s own vernacular. If the term microtransaction refers to mini-payments, then let’s claim the term microcontract to describe these mini-agreements. While media companies should follow Koster’s advice and try to make their campfires comfy, I’m happy to wander among the fireflies.