People often ask, “What is Ethereum for?”. Previous answers to this question often included the term “world computer”, but despite some interesting examples, it’s been difficult to answer this question at a more abstract level. I offer a potential answer to this question. I propose that,
Ethereum is an unprecedented arena for playing cooperative games.
Ethereum enables powerful economic vehicles we don’t yet understand.
Non-cooperative game theory, the original and most widely used branch of game theory, assumes the absence of an external authority to enforce rules. Fundamentally, I claim that the Ethereum ledger constitutes an incorruptible, omnipresent, external judge that no matter the game is always available to enforce agreements among players. This implies that Ethereum, in theory, could turn any non-cooperative game into a cooperative (also called coalitional) game.
The transmogrification from non-cooperative to cooperative games is achieved by a technique…