interesting paper on the economics of security

[Leichter, Jerry]

| Jerry/Hal,
| 
| This lemon-car analogy is interesting.
| 
| One sidebar that might be worked into the argument is the
| apparently widespread side-line business where a car is
| auctioned on eBay but before the sale is consumated the
| buyer engages a mechanic to check the car out pre-sale.
| The car and the mechanic are generally remote from the
| buyer but local to each other, and the mechanic is paid
| by the prospective buyer.  The prospective buyer does not
| know the mechanic and is instead relying on some (to me)
| unknown combination of eBay endorsement and personal
| reputation.  Note that all of what I just said is hearsay,
| though my office-mate says that he has bought three cars
| by this method.  It almost causes me to say "relying party"
| out loud...
| 
| If this idea is a rathole, then my fault and my apology.
The whole eBay model hearken's back to traditional approaches
centering on trusted third parties and "letters of introduction",
which morph into the eBay reputation system.  Not too surprising -
the problems are the same:  Dealing at very-long-arms-length with
others with whom you may never establish an ongoing relationship -
so that the traditional controls based on trade-offs between
today's gain and lost future dealings with the cheated customer
don't apply.

eBay is by no means perfect, but their reputation system does
surprisingly well.  It's not something that is likely to warm a
true anarchist's/pure capitalist's heart, though:  It works
because eBay - a government in most practical senses - polices
quite aggressively and sometimes arbitrarily.

I wonder if there's a business to be made in running an eBay-style
reputation system for web sites in general....

							-- Jerry
| --dan
| 
| 
| 

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