1rst revision Jonas

Author: armandow3f

docs/Polkadot/economics/3-parachain-experiment.md

@@ -6,7 +6,7 @@ title: Experimental Investigation of Parachain Auctions
 
 This entry focuses on experimentally examining the combinatorial candle auction as implemented in the Polkadot and Kusama protocol. Specifically, it compares its outcome with those of more traditional dynamic combinatorial auction formats currently in use. 
 
-What distinguishes the candle auction apart from other dynamic auctions formats is its randomly determined ending time. This closing rule enables auctions to operate on blockchains by mitigating several practical issues that more common formats often encounter (cf. Häfner & Stewart, 2021, for an analysis of the sinlge-unit case). 
+What distinguishes the candle auction apart from other dynamic auctions formats is its randomly determined ending time. This closing rule enables auctions to operate on blockchains by mitigating several practical issues that more common formats often encounter (cf. Häfner & Stewart, 2021, for an analysis of the single-unit case). 
 
 Since the combinatorial candle auction has not yet been studied, either theoretically or empirically, this analysis aims to fill that gap in the literature. The central hypothesis suggests that the candle format performs on par with, or even surpasses, the performance of dynamic combinatorial auctions that rely on specfic activity rules. These rules restrict feasible bids and close the auction when no further bids are submitted, thereby exerting early and serious pressure on bidders. The random ending time is expected to create a similar effect. In particular, this pressure to act may lead to more efficient outcomes, comparable to those generated by activity rules, when contrasted with auctions that use a simple hard-closing rule, such as fixed ending time.
 
@@ -90,7 +90,7 @@ The global bidder has a positive valuation only for the grand package, denoted a
 
 This means that the global bidder draws a valuation $v$ for the package $\{1,2\}$, while always holding a zero valuation for the individual packages $\{1\}$ and $\{2\}$. In contrast, each local bidder $i = 1,2$ draws a valuation $v_i$ for item $\{1\}$, which implies a valuation of $80-v_i$ for item $\{2\}$, and a total valuation of $80$ for the combined package $\{1,2\}$.
 
-Under this valuation model, the global bidder can efficiently obtain the grand package whenever $v \geq \max \{80-v_1+v_2,80-v_2+v_1\}$, while the two local bidders receive one item each otherwise. To successfully outbid the global bidder, the local bidders must coordinate their bids strategically.
+Under this valuation model, the global bidder can efficiently obtain the grand package whenever $v \geq \max \{80-v_1+v_2,80-v_2+v_1\}$, while the two local bidders receive one item each otherwise. To successfully outbid the global bidder, local bidders must coordinate their bids strategically.
 
 
 ### Hypotheses

docs/Polkadot/economics/4-gamification.md

@@ -10,7 +10,7 @@ Recent advances in technologies surrounding Non-fungible Tokens (NFTs) present a
 
 ### Problem statement
 
-Governance is one of the most critical aspects for the future of decentralized systems, such as DAOs and other collectives. These systems rely on active paritcipation from token holders to enable efficient decision-making. However, turnout rates tend to be quite low, which creates the risk of governance exploits by a highly motivated minority. Several factors can help mitigate this risk, for example enhancing usability and user experience within the governance process. 
+Governance is one of the most critical aspects for the future of decentralized systems, such as DAOs and other collectives. These systems rely on active paritcipation from token holders to enable efficient decision-making. However, turnout rates tend to be quite low, which creates the risk of governance exploits by a highly motivated minority. Several factors can help mitigate the risk, for example enhancing usability and user experience within the governance process. 
 
 This entry explores non-monetary incentives as a means to encourage more active engagement within a collective. The approach can be applied to layer0 governance as well as smaller collectives, such as DAOs.
 
@@ -39,15 +39,15 @@ A similar example is the well-known *I voted* badge used in U.S. elections, whic
 
  A review of 91 scientific studies on gamificaton in education revealed that 71% reported mainly positive effects, such as increased engagement and enjoyment, while 25% showed no significant effect, and only 3% reported negative outcomes ([Majuri et al., 2018](https://trepo.tuni.fi/bitstream/handle/10024/104598/gamification_of_education_2018.pdf)). While acknowledging the effectiveness is context-dependent, and despite the overwhelming majority of positive results, some studies do not report negative effects, highlighting important caveats. One source of negative impact is the heightened perception of competition among peers, which can demotivate certain users ([Hakulinen et al., 2013](https://ieeexplore.ieee.org/abstract/document/6542238)). Another common critique is the lack of a clear theoretical foundation, leading to diverse and inconsistent approaches across studies. 
 
-The design process behind gamification elements can be further informed by research from related social science, particularly in countering psychological biases that affect decision-making in small committees, and in leveraging additionally motivational factors such as *loss-aversion* and the resulting *endowment effect*.
+The design process behind gamification elements can be further informed by research from the social sciences, particularly in countering psychological biases that affect decision-making in small committees, and in leveraging additional motivational factors such as *loss aversion* and the resulting *endowment effect*.
 
 Literature has shown that small decision-making groups often suffer from *groupthink*, a bias in which the outcome of the decision process is far from optimal, as individuals do not freely express their opinions ([Janis, 1971](http://agcommtheory.pbworks.com/f/GroupThink.pdf)) or are influenced to act against their better judgement, whether consciously or unconsciously. This issue is particularly pronounced in groups comprised of members with differing levels of power and status. Major disasters have been attributed to *groupthink*, including the *Bay of Pigs Invasion* and the *Space Shuttle Challenger disaster* ([Janis, 1991](https://williamwolff.org/wp-content/uploads/2016/01/griffin-groupthink-challenger.pdf)). 
 
 Subsequent analyses revealed that committe members often willfully ignored substantial evidence. This problem is closely linked to the pressure to conform to authority figures, as demonstrated by well-known psychological experiments such as those conducted by [Milgram, 1963](https://www.demenzemedicinagenerale.net/pdf/MilgramOriginalWork.pdf) and [Asch, 1961](https://psycnet.apa.org/record/1952-00803-001). 
 
 It is crucial to remain aware of these dynamics and mitigate them by distributing final decision-making power among key stake-holders. With this awareness, mechanisms can be implemented to further improve decision outcomes. For example, a study by [MacDougall & Baum (1997)](https://journals.sagepub.com/doi/abs/10.1177/104973239700700407) demonstrated that explicitly appointing a "devil's advocate" can enhance results by regularly challenging group consensus.
 
-Studies in behavioral economics show that individual decision-making is influenced by *loss-aversion*. This phenomenon arises from a non-linear utility function, where the subjective evaluation of outcomes differs between gains and lossess relative to a reference point. Specifically, the disutility of a loss is greater than the utility gained from an equivalent gain ([Kahneman & Tversky, 1992](https://link.springer.com/article/10.1007/BF00122574)). One consequence of this is the *endowment effect* ([Kahneman, Knetsch & Thaler, 1990](https://www.journals.uchicago.edu/doi/abs/10.1086/261737)), which describes the tendency to value an item simply because one possesses it. A practical implication for incentive system design is that users tend to exert greater effort to retain something when there is a possibility of losing it. 
+Studies in behavioral economics show that individual decision-making is influenced by *loss aversion*. This phenomenon arises from a non-linear utility function, where the subjective evaluation of outcomes differs between gains and lossess relative to a reference point. Specifically, the disutility of a loss is greater than the utility gained from an equivalent gain ([Kahneman & Tversky, 1992](https://link.springer.com/article/10.1007/BF00122574)). One consequence of this is the *endowment effect* ([Kahneman, Knetsch & Thaler, 1990](https://www.journals.uchicago.edu/doi/abs/10.1086/261737)), which describes the tendency to value an item simply because one possesses it. A practical implication for incentive system design is that users tend to exert greater effort to retain something when there is a possibility of losing it. 
 
 
 In conclusion, carefully designing a gamified experience can enhance the overall governance process, leading to more active discussions, and, ideally, better decisions.
@@ -65,7 +65,7 @@ Designing an automatic mechanism to award members NFTs based on their on-chain (
 
 On the other hand, incentivizing only positive election outcomes could lead members to become overly conservative, proposing only safe, likely-to-win ideas while neglecting provocative but potentially beneficial proposals. The best strategy, therefore, is to design a mix of different NFTs, where the positive weighting of each individual NFTs is less pronounced, allowing room for a broader range of behaviors. 
 
-In addition, the proposed NFTs should incorporate important key insights from social science research, as mentioned above. For example, some NFTs could include preventive measures against *groupthink*, while others could be designed to leverage *Loss-Aversion*.
+In addition, the proposed NFTs should incorporate important key insights from social science research, as mentioned above. For example, some NFTs could include preventive measures against *groupthink*, while others could be designed to leverage *loss aversion*.
 
 ### Achievements (static)
 
@@ -75,7 +75,7 @@ Achievements are absolute milestones that, once reached, cannot be lost. Potenti
 
 
 ### Badges (perishable)
-Badges are generally perishable and resemble an achievement relative to a specific status or condition. In other words, once the relative status is lost, the badge is forfeited. This dynamic introduces an intriguing motivational factor known as the *endowment-effect*. 
+Badges are generally perishable and resemble an achievement relative to a specific status or condition. In other words, once the relative status is lost, the badge is forfeited. This dynamic introduces an intriguing motivational factor known as the *endowment effect*. 
 
 Badges are well-suited to reflect situational states such as: