Coalition-safe equilibria with virtual payoffs
Aggelos Kiayias, Aikaterini-Panagiota Stouka · 2021
Consider a set of participants invited to execute a protocol Π. The protocol will incur some cost to run while in the end (or at regular intervals), it will populate and update local bookkeeping tables that assign virtual rewards to participants. Each participant aspires to offset the costs of participation by these virtual payoffs that are provided in the course of the protocol and are assumed to be accepted as forms of payment. In this setting, we introduce and study a notion of coalition-safe equilibria. In particular, we consider a strategic coalition of participants that is centrally coordinated and potentially deviates from Π with the objective to increase its utility with respect to the view of at least one of the other participants. The protocol Π is called a coalition-safe equilibrium with virtual payoffs (EVP) if no such protocol deviation exists. We apply our notion to study incentives in blockchain protocols.