Fight for the Middle

Published by Mario Oettler on

One incentive for oracles is to pay them only for their data if they fall within a certain tolerance range. While this sounds like a good solution to avoid outliers, it can cause a fight for the middle. The problem is how the tolerance range is determined. There are two options:

  1. A predetermined fixed point
  2. Depending on the values submitted by the data providers

If we chose option 2, an oracle needs to guess the values of the other reporters in advance to maximize its chance of falling in the tolerance range. The result is that the reporter might not report the true data but instead what he expects others to report.

This means that a reporter can influence other reporters by announcing his results beforehand. This could serve as a Schelling point.

The structure of this problem resembles the beauty contest. Here, jury members need to vote for candidates.

Participants of a lottery have to choose the most beautiful model by submitting a vote. If a participant voted for the beauty contest winner, he enters a second lottery. In this second lottery, a winner is randomly drawn. This winner receives a price.

The result is that participants do not follow their own judgment but try to guess what that majority of participants guesses. Consequently, the votes do not necessarily reflect the true taste of the jury.

If values are submitted openly, later participants can be influenced by those early values.