Weekly Updates

Honestly Dominating

On a recent Partial Common Ownership Working Group call, Matt Prewitt and Aaron Soskin each emphasized an aspect of partial common ownership (PCO) markets that I hadn’t fully appreciated up to that point:

The dominant strategy for selfish participants in properly structured PCO markets is honesty.

That can sound like idealist fluff to the uninitiated, but it has profound impacts on the market’s core attributes and efficiency. Honesty creates compounding competitive advantages for PCO markets over private property systems in addition to the well-established allocative efficiency gains.

A first order effect is simplifying strategy for the average market participant. Instead of needing to constantly evaluate dynamic, complex game theory, the strategy is simplified into an intuitive instruction: be honest about what the asset is worth to you.

We can get caught up in math and theory so much that we forget that real people need to first understand and then execute in the market. 

That’s not to say that valuing assets is always easy (especially in nascent markets). But, PCO markets are naturally self-correcting. 

Those that price their assets too high (honest mispricing or not) will have a net drag on their cash/profits through unsustainable licensing fee payments. Those that undervalue assets will lose control to market participants exploiting the resulting economic profit opportunity.

The PCO equilibrium isn’t just honest valuations, but publicly available, accurate ones. 

In this type of environment, operational efficiency and ability to monetize assets are the main vectors of competition rather than information asymmetry. That is much more “productive competition” from a societal perspective.

Finally, ideals and culture do matter. We’re human, and a market that systematically rewards honesty rather than trying to pull one over your competition will have positive spillover: culture that we can extend into public good support and positive-sum coordination that extractive mindsets can't compete with.



On Deck

  • Hooking up the smart contract plumbing for the Cadastre redesign
  • Continue updating the Geo Web docs site

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