[JoshPurtell]

This is a really great idea!

It sounds like your first approach is to verify that events met an agreed-upon threshold.

Have you looked into Mechanism Design and getting customers to e.g. pay more for great outcomes, and a little for ok outcomes?

[benjsm]

Thank you - yes! Would love to lean more about mechanism design. Mind diving deeper?

[JoshPurtell]

The basic idea is this. The customer has some "curve" that represents how much he values different outcomes. Maybe he values good outcomes at $1, and great outcomes at $100. The supplier also has a cost curve - by definition, it will cost him more to supply a great outcome than a good outcome (otw he'd just always supply the great outcome).

Setting a fixed price is a simple way to help these two parties transact. But hypothetically, it may be more efficient - e.g. you will let more mutually-beneficial events happen - to ask both parties for what their number is for a given event, and having both transact when the numbers are far enough apart (cost is $10, value is $100).

The problem is, you can't directly ask the parties, because they don't want to reveal how high/low they're willing to go for no reason. So, you should essentially structure your questions into a pre-defined algorithm so that everyone is incentivized to reveal at least the ballpark of where their cost/value is. The study of how to structure those questions is a subset of mechanism design / information design, which is a branch of Econ related to game theory

[JoshPurtell]

FWIW, if this sounds like arcane academic musing ... applied mechanism design for a while was essentially just the study of google ad auctions, and Google invested very very heavily in researchers to figure out how to do this for them

[benjsm]

Very very interesting. It makes a lot of sense. I appreciate you sharing.

[benjsm]

Definitely digging deeper into this now. I think it becomes more and more important as models improve.