Resumen de Co-Utility in the Digital Economy: Conciliating Individual Freedom and Common Good in the Information Society
Abeba Nigussie Turi
The collaborative economy refers to the digital economy of the millennial era which relies on the information technology as the main catalyst. Mesh, peer or sharing economy are the other terms that are interchangeably used to refer to the hybrid market models of this economy. Financial technologies, including the business lines of peer-to-peer transactions, the crowdfunding and crowdsourcing, innovation and educational marketplaces, are some of the common structures of this economy. This economic system is shaping the trends in consumption, production, distribution and, more generally, utilization of scarce resources. It is mainly characterized by the disintermediation of the traditional centralized form of economic system. The peer-to-peer business models underlying this economic system are enabled by the digital platforms that facilitate direct peer-to-peer transactions. Currently, these new collaborative business models account for a significant segment of the global economy, and they exhibit a fast pace of growth and adoption across different sectors. As this collaborative form of value creation emerges and the economic system gets more complicated, the system becomes prone to many serious problems that hamper its efficiency. Some of the new challenges and uncertainties currently arising in this economic system include privacy risks, security and operational risks (dangers of fraud, cybercrime and operational outages), platform failure, lack of trust between the transacting peers resulting from the information asymmetry, risk of default, usury and systemic financial risks due to liquidity, and credit risks with the business cycle uncertainties. Apart from its externalities to the traditional business models and incumbent players, this economic system also poses a challenge to the government in enacting new rules and regulations that govern the new businesses models and hence disrupts the government revenues at its current stage of growth.
In this work, we aim at approaching this economic system and tackle some of the aforementioned problems associated with it by introducing the notion of co-utility, which adheres to the self-governance principle. By considering specific use cases of the collaborative economy business models and identifying the case-specific problems, we design co-utile protocols through incentive mechanisms that can tackle the underlying problems. More specifically, we consider the crowd-based business models (crowdfunding and crowdsourcing), the P2P online lending market, and further extend our analysis to the e-commerce market. In this class of business models, where collaborations are facilitated by non-physical digital platforms, a standard principle governing selfish agents in an efficient way is needed. Hence, the notion of co-utility which we introduce in this work is helpful to conciliate the individual freedom and common good of the information society encompassing this economic system. In order to deal with the information asymmetry and the resultant mistrust and fear effects inherent to the crowdfunding market, we model potential incentive schemes that may render crowdfunding strictly co-utile. The incentive schemes we propose are community-based reputation and cryptographic mechanisms. Similarly, for the P2P online lending market and e-commerce, in order to tackle the problem of lack of trust between transacting peers, we leverage a distributed reputation protocol based on the co-utility principle. The mechanism relies on the key assumption of transitive trust. This reputation mechanism is cost-effective, anonymous in its computation and robust against tampering attacks; these features make it attractive for these markets.
More specifically, the main contributions of this work are as follows: • We have analyzed the notion of co-utility under the perspective of the collaborative economy. Specifically, we have discussed the related concepts of reciprocity and hybridity and the compatibility conditions under which these concepts satisfy a co-utile form of interaction. We have also identified co-utility amenable games framed within the collaborative economy, which include crowdsourcing, crowdfunding, cryptocurrencies and P2P online lending.
• We have analyzed the crowd-based business models under a co-utile perspective. In particular, by identifying the key problems underlying the crowdfunding market, we have modeled potential incentive schemes to address the mistrust and fear effects that may prevent crowdfunding from being strictly co-utile. The incentive schemes we propose are community-based reputation and cryptographic mechanisms. By characterizing the project types (i.e. those projects that guarantee a safer transaction either to the entrepreneur or the investor or both) we have elaborated the extent to which a given project is exposed to a given risk level. Furthermore, based on our analysis, we have pointed out implications to improve the conventional methods of operation.
• The peer-to-peer online lending market also suffers from the mistrust effect, which may render it inefficient. In order to tackle this problem, we have leveraged a distributed reputation protocol based on the co-utility principle. In this co-utile protocol, rational peers cooperate to compute each other’s reputation scores. Reputation scores of borrowers are computed based on the outcome of direct transactions. Then, the reputation mechanism helps filtering credible borrowers based on their respective reputation scores. By using an experiment on a simulated platform with a randomly selected sample of loans from Lending Club, we have shown that this protocol can improve the efficiency of the P2P online lending market by filtering out defaulting borrowers.
• Finally, we have also applied the decentralized reputation protocol to the electronic commerce market in order to rate buyers and sellers. In addition to being decentralized and anonymous, the reputation mechanism we employ also discourages agents from whitewashing a bad reputation; that is, it deters buyers and sellers from operating under a new pseudonym or start all over, which is one of the common problems in this market. The mechanism does so by assigning the worst possible reputation scores to new market entrants and increasing the reputation costs of exit and re-entry.
To sum up, the work presented in this thesis contributes to the scanty literature on the collaborative economy and further draws implications to improve the conventional methods at play.
