Part 1 - Introduction Mechanism Design - Programming human behavior through carefully designed incentives. Humans are goal-oriented machines that react to incentives. Incentives are produced by economic games that can be crafted and engineered. So we humans do something to reach a goal, and one of the most unifying goals is money. So we design a mechanism that´s output is money leading to the goal that the individual actually desires. By designing economic games appropriately, we can force selfish humans to exhibit useful behaviors.
Example with the E-Scooters at their inception. There was the problem of them getting charged and distributed back to good places at the start. So instead of having a centralized pick-up service collecting and recharging them, individual people got money for doing so. And they did.
The incentive mechanisms of bitcoin mining can be applied to any of such tasks. Instead of upfront saying you´ll give someone XXX amount of money for doing the task, say you have $2.000 a day that you distribute to solving this task. People will join, more and more and they have this competition effect of lowering the cost until it reaches the opportunity cost. That´s the point where no more new people will join the completion of the task. The optimal pricing strategy.

The Basics of programming humans: You find a way of getting between the human, and the sub-goal that gets them to where they want to go. Then you generate a mechanism that rewards them for doing a task that you want.

Part 2 - Pitfalls
Incentives are often more powerful than the moral frameworks of players in economic games. Example: Maurice, governor in the 1920s 1930s in Canada => https://en.wikipedia.org/wiki/Duplessis_Orphans

Decentralized protocols enforce games that cannot be terminated or updated, rendering errors potentially fatal.

Part 3 - Mechanism design in the Wild 💡 Idea: Take this Mechanism design framework and use it for crypto analyses, analyze projects (and then write about them)

Designing an economic game comes in three steps:
1. Choose a goal

2. Choose a reward mechanism

3. Choose a reward function to match it

Bitcoin for example:

1. Maximise network security to avoid double spends

2. Tokesn distributed relative to the security contribution of each miner

3. Poor of work and block production, acceptance, and fork avoidance

Arweave for example:

1. Secure store data, permanently

2. Users contributes funds to an endowment when they add data to the network. Miners are rewarded from the endowment over time.

3. Proof of access

Andreessen Horowitz (AZ) • Sam Williams: Mechanism Design 101