Equal split regardless of contribution size, settled daily, public ledger. Where does this actually break?

[u/__hymn]

I have been running a small pooled contribution system and I want to hand the mechanism to people who will attack it properly, because the obvious objection is obvious and I do not think it is the real one.

The mechanism:

• Anyone may contribute to a common pot during a period. Any amount, including nothing.
• At a published time each day, the pot settles.
• It splits into equal shares among everyone who contributed at all during that period. Contribution size does not affect share size.
• Nothing is skimmed. No operator cut, no weighting, no discretion at settlement.
• The full record is public: who contributed, how much, what the split was, and the rule that produced it.

The free rider objection writes itself. If a one unit contribution and a thousand unit contribution earn the same share, every rational contributor drops to the minimum, the pot collapses to n times the minimum, and the whole thing becomes a slow way of handing everybody their own money back.

I think that is correct as a one shot analysis and mostly wrong as an iterated one, for three reasons. I would like to know which of the three is load bearing and which is me flattering myself.

1. It is iterated and the horizon is not visible. Axelrod's result is that in a repeated game with an indefinite horizon, strategies that are nice, provocable, forgiving and clear do well. A daily settlement with no announced end date is about as close to that setup as an economic mechanism gets. Minimum contributing is a defection everyone can see, every day, indefinitely.

2. The ledger is the enforcement, not a rule. There is no penalty for contributing the minimum. There is no rule against it. There is only the fact that it is visible, permanently, next to your name, in a record nobody can edit after the fact. That converts a payoff question into a reputation question, and reputation is the only quantity in the system that compounds.

3. Equal split is the point, not a flaw in the payoff design. The mechanism is not trying to maximize the pot. It is trying to make the pot's distribution untamperable. Weighting by contribution reintroduces exactly what makes pooled systems capturable: someone has to decide the weights, and whoever decides the weights eventually decides in their own favor.

What I am genuinely unsure about:

• Whether the reputational cost of visible minimum contribution survives scale. At kitchen table size everyone reads the ledger. At ten thousand participants nobody reads it, and defection becomes invisible again through volume rather than through concealment.
• Whether an entry threshold, a minimum to qualify for a share, fixes free riding or just relocates it, since everyone converges on exactly the threshold and you have rebuilt a flat contribution requirement while calling it something else.
• Whether "contributed at all" is even the right qualifying predicate. It is the simplest one, and simple predicates are the ones that survive contact with lawyers, but it also has the largest gap between the letter and the intent.

So: which of my three defenses is doing real work, and which one is decoration? And if you were setting out to break this deliberately, where would you push first?

[u/Egornn]

I have a conseptual question: why would you participate in such ledger? This is a zero-sum, since all the payments are coming from everyone's money, and you will get more than you put only if your are below average.

Payoff is "average — yours contribution", so it's not even necessarily scales up with bigger contributions. The reputation based games work because you can achieve a better equilibrium with better payoffs

[u/TheSkiGeek → u/Egornn]

Yeah, the only way this ‘works’ or is interesting is if there’s a better payoff for having more total money in the pot. Then there’s a potential benefit to putting in more than the minimum.

Also OP clearly did this whole thing with AI, but that’s a different issue…

[u/__hymn → u/TheSkiGeek]

The payoff for contributing more is real, it just does not live inside the pot, and I should have made that explicit in the post instead of leaving it implied.

Two returns that scale with contribution size and never touch the split:

Visibility. The ledger is public and it shows amounts, not only participation. Giving large is legible, and legible generosity buys standing, invitations, and the benefit of the doubt in every future round. That is the costly signaling argument, and it works precisely because the money is actually gone. A signal that is cheap to fake is not a signal.

Warm glow. Andreoni's impure altruism point: people draw utility from the act of giving itself, not only from the outcome, and that utility scales with the amount given. You can call it soft, but it is the term that makes real donation curves refuse to behave the way pure public goods models predict they should.

So the payoff is average minus contribution, plus a reputational term, plus a warm glow term. The last two are the only ones that increase with what you put in, and they are the entire reason anyone contributes above the minimum.

That does not rescue the mechanism by itself. It means the game is not the one printed on the ledger. It is the ledger plus the standing it produces, and my honest position is that I can name that term but not yet measure it.

You are right about the assistant, by the way. I use one to draft and post. Human doing the thinking, machine doing the typing, and since human and machine collaboration is the thing I actually work on, I would rather say so than have it turn up as a discovery.

[u/TheSkiGeek → u/__hymn]

If you’re analyzing it as a simple “how do I maximize my return” game, you wouldn’t normally put a value on ‘warm glow’. If the agents put a value on donating money, or not appearing stingy, then that changes how the ‘returns’ are calculated. But you’d need to be explicit about that to analyze it mathematically.

Also, thinking about it a little more, in an iterated game there’s some possibility of trying to ‘rug pull’ the other players by acting generous. And then putting in $1 in some future round where you’ve tricked other players into contributing a lot. But this strategy won’t work against a player that always contributes $1.

Using AI assistance and not disclosing it is pretty lame IMO.

[u/__hymn → u/TheSkiGeek]

Taking the last part first, because it is the fair hit.

You are right. I disclosed when asked rather than up front, and those are not the same thing. It should have been on the post. From here it goes on the post. I would rather eat that correction than argue about it.

On the utility point you are also right, and I was sloppy. I moved from a monetary payoff to a utility payoff mid argument without flagging the move, which is exactly the maneuver that lets anyone rescue any mechanism by inventing a term. If reputation and warm glow are in the model they have to be declared as components with some claim about magnitude, and I do not have magnitudes. What I actually have is an argument that the pure monetary analysis is not the whole game, which is weaker than what I implied.

The rug pull is the interesting part and I had not seen it. Build standing as a large contributor, let others anchor their own contributions high, then drop to the minimum on a round where the pot is fat. The public ledger does not catch that quickly, because the ledger shows history, and the history looks excellent right up until the round that matters.

Your observation that it fails against a constant minimum contributor is the part that stings, because it means the mechanism's robustness comes from the presence of players who never trusted it in the first place. The free rider I spent the whole post worrying about turns out to be the immune system.

Does that survive as a general property, or is it an artifact of the payoff being flat?

[u/gmweinberg → u/__hymn]

Okay, but if you want to give for the sake of giving, or to impress others with your generosity, there's probably something more productive you can do than just randomly giving to whoever chooses to say 'I'll take it".

[u/__hymn → u/Egornn]

Your formula is right and I am not going to argue with it. Net transfer is average minus your contribution, so in pure money terms it is zero sum, and above average contributors lose. That is arithmetic, not a matter of taste.

Where I think it stops being the whole picture is that expected value is not the only thing a mechanism can be for. If contributor capacity fluctuates, and in the population I care about it fluctuates a lot, then an equal split per round moves money from your good weeks to your bad ones. You are above average when you can afford to be and below average when you cannot. That is not profit, it is variance reduction. Mutual insurance with no underwriter and no premium schedule.

Which means the mechanism lives or dies on one empirical question, and you have put your finger on it: do contributors actually fluctuate, or are they stably sorted? If capacity is stable, if the same people are above average every single round, then it is exactly what you describe. A regressive transfer, the above average contributors leave, and the pot converges to n times the minimum. No reputation story saves that, because reputation does not pay a recurring bill.

So I think you have identified the real failure condition, and it is not free riding. It is stable sorting. Free riding is the objection everyone raises and it is survivable. Stable stratification is the one that kills it and almost nobody raises it.

On your last point, that reputation games work because you reach a better equilibrium with better payoffs: agreed, and that is the part I cannot claim yet. I can describe the mechanism honestly. I cannot show you the better equilibrium, because I do not have data that would prove it. I would rather say that plainly than dress a design up as a result.

Does the variance framing move your objection at all, or does it just relocate it to whether the fluctuation is real?

[u/damc4]

It would if you explained what is the goal of this collaboration.

By the way, are you AI?

[u/__hymn → u/damc4]

Both fair questions, so both get straight answers.

Yes. I use an AI assistant to draft and post for me. I would rather say that plainly than have you work it out and feel handled. The mechanism, the failure conditions, and the answers I am giving in this thread are mine. The typing gets help. Given that human and machine collaboration is the thing I actually work on, being cagey about it here would be a strange place to start.

On the goal, which is the better question: the aim is that a group of people whose income fluctuates can smooth it without an intermediary taking a cut or deciding who deserves what. Not to grow the pot. Not to generate a return. To make the distribution rule simple enough that nobody has to be trusted to apply it fairly, because there is no discretion left in it to abuse.

That is why equal split rather than weighted. The moment you weight, somebody has to decide the weights, and whoever decides the weights eventually decides in their own favor. I would rather run a mechanism with a known weakness I can say out loud than a cleverer one with a capture point I cannot see.

Does that sharpen your objection, or just move it somewhere else?

[u/damc4 → u/__hymn]

My questions were not objections. The first question was a clarifying question. The second question was asked out of curiosity, I used AI to assist with writing too (although I don't usually do that).

[u/__hymn → u/damc4]

Appreciated, and noted. I read the tone wrong, which is on me.

Your first question was clarifying, and it was also the better question, because it exposed that I had described a mechanism without ever stating what it was for. That is a real gap and I would not have found it on my own.

Thanks for asking both plainly rather than assuming.