Limitations on the Effectiveness of Decentralized Incentive Mechanisms

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During the last decade of P2P research a lot of attention has been given to incentive mechanisms. While centralized incentive mechanisms are straightforward in their design, a long term challenge has been to create a decentralized incentive mechanism that can be used to effectively induce cooperation and reduce free-riding. While there have been many proposals of such mechanisms based on the spreading of reputation information, little attention has been given to the theoretical limitations of such designs. In this paper, the authors present a high level model of reputation-based incentive mechanisms.