[sanswork]

Say you buy a new xbox off me at an agreed price of $500. You lock up $1000 I lock up $500 and send you a used Xbox only worth $250. You believe most people will eat the $500 loss?

I don't believe that for a second and that's even ignoring the fact you need everyone to have double the amount of anything they want to transact. A seller needs enough cash to cover the cost of all their stock and buyers will need enough money to buy everything they want twice.

[exo762]

This behaviour is very risky for fraudster. Some buyers will suck up the loss and free the money. Others will say "fuck this guy" and will not free money.

What are the chances what fraudster will make money out of this?

As for your second point - this indeed will prevent large percentage of population from participation as buyers (basically everyone without savings). As for sellers - irrelevant. We are talking about markets that can benefit from security and anonymity. Higher cost of doing business is implied, but in this case its only a time-cost of money (which is all time low today).

I think 2 party escrow is a viable alternative to 3d party escrow because it should be harder to game.

[sanswork]

But not many. Almost everyone will take the loss because the cost of saying screw you is double the cost of the product itself. They could cut their losses get half back and buy the product elsewhere and they'd have the same amount of money but the full product.

I remember pointing this out about every month or so in 2014 when it seemed everyone and their dog were posting this method of escrow.

[stevedekorte]

The results of the Ultimatum game psychology experiments suggests almost everyone will act punitively. See:

https://en.wikipedia.org/wiki/Ultimatum_game

And we only need 51% to act punitively to ensure all fraudsters go bankrupt.

[exo762]

Do you see a better way of doing distributed (maybe anonymous) markets? I don't have much faith in OpenBazaar since their reliance on trusted 3rd parties mean that they are wide open to collusion between party and arbiter.

[sanswork]

No but that doesn't make this a good way or a safe way.

I don't have much faith in openbazaar either because they offer nothing more than a shopping cart software would get you but require a software download to use.