Can a bond tell reliable hardware from unreliable?

research/stake-screening

Can a bond tell reliable hardware from unreliable? Single crossing runs the wrong way: reliable rent (θ_H−θ_L)(c+(1+ρ)s_H)/(1−θ_H) is minimised at zero stake, a flat wage is optimal, and a deterrence stake scales rent by (c+(1+ρ)s)/c.

9 tests

What it found

Workers have hidden fault rates and accept a wage-and-stake contract. Single crossing runs the wrong way: the reliable worker is the one who would copy a high-stake contract, so its rent is exactly (θ_H−θ_L)(c+(1+ρ)s_H)/(1−θ_H), minimised at zero stake, and with continuous types a flat wage with no stake is optimal (no random 2–4-contract menu beats it). A stake needed for deterrence is a tax: it scales reliable workers’ rent by (c+(1+ρ)s)/c and lowers the pool’s fault rate (0.169→0.089) at 9–55% of profit. Stylised.

A figure from its own output

Figure produced by research/stake-screening: stake_tradeoff — stake-screening/experiments/stake_tradeoff.svg, written by the project's own experiment code.

Paper, code and results

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Produced with AI assistance (Claude). Results are from the code in this repository and are simulated or stylised unless the abstract says otherwise; nothing here implies affiliation with or endorsement by any lab, researcher or company cited. MIT licensed.