Truth by Consensus: A Theoretical and Empirical Investigation

Gabriele Camera, Rodney Garratt and Cyril Monnet

Working Papers from Chapman University, Economic Science Institute

Abstract: Truthful reporting about publicly observed events cannot be guaranteed by a consensus process. This fact, which we establish theoretically and verify empirically, holds true even if some individuals are compelled to tell the truth, regardless of economic incentives. In an experiment, subjects routinely misreported a commonly known event when they could monetarily gain from it. Relying on majority consensus did not help uncover the truth, especially if complying with the majority granted small personal monetary gains. This highlights the difficulties in relying on shared consensus protocols to agree on specific events, and the importance of institutions with trusted, impartial observers.

Keywords: coordination; experiments; DeFi; digital currency; dishonesty; trust (search for similar items in EconPapers)
JEL-codes: C70 C90 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-exp
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https://digitalcommons.chapman.edu/esi_working_papers/406/

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Working Paper: Truth by Consensus: A Theoretical and Empirical Investigation (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:chu:wpaper:24-10

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