Re:One glaring oversight (Score 1)

"Mr. Friedman makes a number of good points in his case, but he overlooks one major requirement for a reputation: a fixed public identity" Actually, I don't overlook it. The following is from the article: --- As long as other people are willing to deal with cyberspace personae not linked to realspace identities, I always have the option of rolling up a new public key/private key pair and going online with a new identity and a clean reputation. The implication is not that reputational enforcement will not work but that it will only work for people who have reputations--sufficient reputational capital so that abandoning the current online persona and its reputation is costly enough to outweigh the gain from a single act of cheating. Hence someone who wants to deal anonymously in a trust intensive industry may have to start small, building up his reputation to the point where its value is sufficient to make it rational to trust him with larger transactions. Presumably the same thing happens in the diamond industry today.9 The problem of spinning off new identities is not limited to cyberspace. Real persons in realspace have fingerprints but legal persons may not. The realspace equivalent of rolling up a new pair of keys is filing a new set of incorporation papers. There is a well developed literature on the result, explaining marble facing for bank buildings and expensive advertising campaigns as ways of posting a reputational bond which makes it in a corporation's interest to remain in business, and hence gives others an incentive to trust it to act in a way that will preserve its reputation.10 Cyberspace personae do not have the option of marble, at least if they want to remain anonymous, but they do have the option of investing either in a long series of transactions or advertising, in order to effectively bond future performance. --- While I'm posting, let me put in a plug for the current draft of my book _Future Imperfect_, which includes a chapter on this topic. It's webbed for comments at: http://www.daviddfriedman.com/future_imperfect_dra ft/future_imperfect.html