From mboxrd@z Thu Jan 1 00:00:00 1970 Return-Path: Received: from smtp1.linuxfoundation.org (smtp1.linux-foundation.org [172.17.192.35]) by mail.linuxfoundation.org (Postfix) with ESMTPS id 5061FBBF for ; Thu, 30 Nov 2017 06:05:05 +0000 (UTC) X-Greylist: whitelisted by SQLgrey-1.7.6 Received: from mail-yb0-f196.google.com (mail-yb0-f196.google.com [209.85.213.196]) by smtp1.linuxfoundation.org (Postfix) with ESMTPS id A8C81F1 for ; Thu, 30 Nov 2017 06:05:03 +0000 (UTC) Received: by mail-yb0-f196.google.com with SMTP id v12so2307897ybj.5 for ; Wed, 29 Nov 2017 22:05:03 -0800 (PST) DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=gmail.com; s=20161025; h=mime-version:in-reply-to:references:from:date:message-id:subject:to :cc; bh=F9lBxp+7IkuR3d3Z3wmCLHjqc8GDwApvmVvHiSjJgAk=; b=koQBOuvTisYVCpjZSKTX2nJuVfMQ8wvP0UC656P0kkhfcriJO/OTysVnFwIYrEKTJl h+a51W4Y/a7EHPGpnI5wjzig0PRTMRFqOMB0A9X3JiPlqatotrDYm1rFng0Rgr1IZSRV GGCncceVRID+LQsGnAMfJU+c0D6xPLGnTOkpXv0IaoC8NBUSp3tqqZBCO6UGY5ObZCSz j+gy1gEVWe+D9aUTHb3IArqzQ+emjQTdpsVN0dsjtRUHisONfvv7u0pWrmMTC7gv9HTV 6j7G9PprfGk9E75fTOZFRAoBi7OsCzFdvmKcEuHJDNFfkiFCc52nGiDhGSGN5r4Oyt3Q Ud0Q== X-Google-DKIM-Signature: v=1; a=rsa-sha256; c=relaxed/relaxed; d=1e100.net; s=20161025; h=x-gm-message-state:mime-version:in-reply-to:references:from:date :message-id:subject:to:cc; bh=F9lBxp+7IkuR3d3Z3wmCLHjqc8GDwApvmVvHiSjJgAk=; b=C0hTpbYcMXPRr7dTnHzBbr4Xb5XFIgI96DUh/Ah0vh7T6uEOJ9TnKwqXgCb+FhhnKy s2EnUL5F/J4aJ/Wdcic3mxOomXn1TLAbeFComxEk+gV7QkXTMxIuDuFAf5ZKP8tPurSf zBktaWsfFrooSox+97JaML9mju4aVPCzCcQYZxSYl/fpFI5lVGeMsWjGiwdJ2v4ie5Cw BhgkBAG8CtNVlO2zqnz9vxQoN7Ck5H0oYvFxS3hQXa3+NeYw4MJQW5Ahpi9zx7RA2QYM fDDiIQE1MzQh1CT0TFAIgwoVDkVl4oN91QZ9vQY9dauPe1JyXZohzFGLtpmNEBXuWyRy OinQ== X-Gm-Message-State: AJaThX41QiYuLJJ11Y9S/H7gdDXXOhPd2pJwto3S+soEI4M9J24myAqp nWa9SB1p6419JAJ1Fv2D0v9fyZIVT3EQ5WRdeDI= X-Google-Smtp-Source: AGs4zMbcfCq/AofvNBZQ86XLQ7MrmjvUj+DGveNSCyJXZiEfoYMmtabG3F5um+DGh7FDXq1sBOQHqZJh5v+VCVB29OM= X-Received: by 10.37.128.193 with SMTP id c1mr781054ybm.153.1512021903060; Wed, 29 Nov 2017 22:05:03 -0800 (PST) MIME-Version: 1.0 Received: by 10.37.43.195 with HTTP; Wed, 29 Nov 2017 22:05:02 -0800 (PST) In-Reply-To: References: From: William Morriss Date: Wed, 29 Nov 2017 22:05:02 -0800 Message-ID: To: Chenxi Cai Content-Type: multipart/alternative; boundary="089e08230f906cb3b3055f2d081a" X-Spam-Status: No, score=-2.0 required=5.0 tests=BAYES_00,DKIM_SIGNED, DKIM_VALID, DKIM_VALID_AU, FREEMAIL_FROM, HTML_MESSAGE, RCVD_IN_DNSWL_NONE autolearn=ham version=3.3.1 X-Spam-Checker-Version: SpamAssassin 3.3.1 (2010-03-16) on smtp1.linux-foundation.org X-Mailman-Approved-At: Thu, 30 Nov 2017 11:03:54 +0000 Cc: Bitcoin Protocol Discussion Subject: Re: [bitcoin-dev] BIP Idea: Marginal Pricing X-BeenThere: bitcoin-dev@lists.linuxfoundation.org X-Mailman-Version: 2.1.12 Precedence: list List-Id: Bitcoin Protocol Discussion List-Unsubscribe: , List-Archive: List-Post: List-Help: List-Subscribe: , X-List-Received-Date: Thu, 30 Nov 2017 06:05:05 -0000 --089e08230f906cb3b3055f2d081a Content-Type: text/plain; charset="UTF-8" Content-Transfer-Encoding: quoted-printable On Wed, Nov 29, 2017 at 9:52 PM, Chenxi Cai wrote: > Hi All, > > > Auction theory is a well-studied problem in the economics literature. > Currently what bitcoin has is Generalized first-price auction, where > winning bidders pay their full bids. Alternatively, two approaches are > potentially viable, which are Generalized second-price auction and Vickre= y=E2=80=93Clarke=E2=80=93Groves > auction. Generalized second-price auction, where winning bidders pay thei= r > next highest bids, reduces (but not eliminate) the need for bidders to > strategize by allowing them to bid closer to their reservation > price. Vickrey=E2=80=93Clarke=E2=80=93Groves auction, a more sophisticate= d system that > considers all bids in relation to one another, elicit truthful bids from > bidders, but may not maximize miners' fees as the other two systems will. > > > Due to one result called Revenue Equivalence, the choice of fee design > will not impact miners' fees unless the outcomes of the auction changes > (i.e, the highest bidders do not always win). In addition, the sole benef= it > of second-price auction over first-price auction is to spare people's > mental troubles from strategizing, rather than actually saving mining fee= s, > because in equilibrium the fees bidders pay remain the same. Therefore, i= n > balance, I do not see substantial material benefits arising from switchin= g > to a different fee schedule. > > > Best, > > Chenxi Cai > > Changing the bidding system to the marginal price allows us to supersede the block size limit, which changes the outcome of the auction, as different transactions are included. --089e08230f906cb3b3055f2d081a Content-Type: text/html; charset="UTF-8" Content-Transfer-Encoding: quoted-printable
On W= ed, Nov 29, 2017 at 9:52 PM, Chenxi Cai <Chenxi_Cai@live.com> wrote:

Hi All,


Auction theory is a well-stud= ied problem in the=C2=A0economics=C2=A0literature. Currently what bitcoin h= as is Generalized first-price auction,=C2=A0where winning bidders pay their= full bids. Alternatively, two approaches are potentially viable, which are Generalized second-price auction and=C2=A0Vickrey= =E2=80=93Clarke=E2=80=93Groves auction.=C2=A0Generalized second-price aucti= on, where winning bidders pay their next highest bids,=C2=A0reduces (but no= t eliminate) the need=C2=A0for bidders to strategize by allowing them to bid closer to their reservation price.=C2=A0Vickrey=E2=80=93Clarke=E2= =80=93Groves auction, a more sophisticated=C2=A0system that considers all b= ids in relation to one another, elicit truthful bids from bidders, but may = not maximize miners' fees as the other two systems will.=C2=A0


Due to=C2=A0one result called= =C2=A0Revenue Equivalence, the choice of fee=C2=A0design will not imp= act miners' fees=C2=A0unless the outcomes of the auction changes (i.e, = the highest bidders do not always win). In addition, the sole benefit of second-price auction over first-price auction is to spare peopl= e's mental troubles from strategizing,=C2=A0rather than actually saving= mining fees, because in equilibrium the fees bidders pay remain the same. = Therefore, in balance, I do not see substantial=C2=A0material=C2=A0benefits arising from switching to a different fee schedule.=C2=A0


Best,

Chenxi Cai



Changing the bidding syste= m to the marginal price allows us to supersede the block size limit, which = changes the outcome of the auction, as=20 different transactions are included.
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