Crypto Research

Modern Economical Nonsense – Design A Reputation-Based System

Have you ever been judged by others about your reputation or accountability? Everyone has their checklist about someone’s accountability in their mind. How about there is a bank of accountability on the internet? What is the goal of a reputation-based system? Or should we have a better system to implement?

Let’s explore. 

Image credit: Photo by Stephen VanDyke via https://www.poynter.org/tech-tools/2017/will-your-foia-request-succeed-this-new-machine-will-tell-you/

Table of Content

What is a Reputation-Based System

Functions

Models

Example of Centralized System

Example of Decentralized System

Design Thinking about Reputation System

Alternative Design

In Conclusion

What is a Reputation-Based System

It is a system that “formalizes the process of gathering, aggregating, and distributing information about individuals’ past behavior” or a system to verify your accountability through the past history of records.

Functions

The system has three core functions:

  • Determine trustworthiness
  • Incentivize for good behavior
  • Deterrent to misbehavior

Models

There are two extreme models: centralized and decentralized, with three different approaches: 

  • Subjective reputation system
  • Objective reputation system
  • Hybrid reputation system

The centralized system: you have a central authority to keep a record of data and review the algorithms

The decentralized system: it depends on peer-to-peer review, and algorithms become self-feeding loops

Both systems can be subjective or objective. Likely they will implement hybrid systems to improve the accuracy of the result.

Example of Centralized System

Image credit: https://www.semanticscholar.org/paper/AmazonRep%3A-A-Reputation-System-to-Support-Amazon%E2%80%99s-Benlahbib-Nfaoui/595b72ca073572dc8add1c00a568f22bdc67b14d

Amazon is one of the largest reputation systems that is built to process customer purchase decision-making. 

They gather data through customer purchase records, re-categorize the data and distribute it through their criteria score system. Then they will generate a reputation score for a centralized review team to improve the result while optimizing the algorithm.

Example of Decentralized System

Image credit: https://docs.neworder.network/new-order/protocol-overview/governance/computer-aided-governance

From one of New Order DAO, reputation is created through a question and answer process. Data are collected through question-asking. The result of the discussion then produces a decision voting process with action to conclude. Then, contributors will receive incentives after the procedure to boost their reputations.

Although it may not seem like a traditional process of the reputation system, it reflects how members can accumulate their reputation in the DAO.

Design Thinking about Reputation System

How can one design its reputation system? 

The core idea: capitalizing on the motivational power of reputation

There are two ways to incentivize reputation: through a scoring system indirectly or through a credit system in a direct way.

Amazon is using an indirect way as a scoring system to give users visualization about how sellers performed works in the past with comments that further detail the history.

Some DAO give contributing members tokens that record on the blockchain for everyone to explore as a direct way to incentivize motivation to perform more contributions to the space.

You want to ask three questions to define your reputation system further:

  • How to align your key business objectives in the reputation system
  • What information include in the reputation profile
  • How to display the reputation score

One of the largest gaming companies, Ubisoft came up with reputation management to promote good behavior and sanction bad behavior in their game Rainbow Six Siege.

Image credit: https://www.ubisoft.com/en-us/game/rainbow-six/siege/news-updates/1tjFZoNSJycILiLUjMyw7X/devblog-reputation-system

Players’ actions are judged by reputation score through two layers: actions and branches. Results of gaming actions will put you into specific categories, either being to be supportive or being to be sanctioned. 

Alternative Design

Of course, one will suggest such a system is very biased. However, you can still design your system more autonomically. With a self-looping and self-feeding system, one can prevent bias in the system.

Image credit: https://www.researchgate.net/figure/Reputation-system-and-its-functional-components_fig2_251907884

However, constant monitoring is still required to ensure the algorithm is justified.

In Conclusion

The reputation system is everywhere nowadays, whether you like it or not. However, the system will continue improving through different ideas and organizations.

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