This asymmetry could undermine trust and discourage participation.
Severely, unless you can find a mitigation.
Each user has near-perfect knowledge of what they were going to do anyway. They can guess at the swindle rate—the rate at which counterparties play games to various sorts that prevent an honest/equal mutual neutralization. You describe one swindle, but there are other variants as well.
Unfortunately, the incentive for swindlers to participate is stronger than the incentive for honest players. The honest player is trading a known donation to Go Go Guns for a possibility of averting a contribution to No No Guns. The swindler is giving up nothing and only has an upside. That doesn’t strike me as a stable equilibrium.
A partial fix would be to require users to hand over the money when listing on the site with instructions to forward it to Go Go Guns unless someone who had conditionally committed to No No Guns pairs with them. This would reflect the true preference of an honest player, but would make it harder for someone who was just interested in maximizing donations to GiveWell and was going to counterfactually donate there anyway. Now they must accept the risk of not matching and watching their money sent to Go Go Guns.
But:
This would require more legal/accounting work for DuelGood, could make certain types of donations impossible (e.g. hard money political donations), and could cost donors tax writeoffs.[1]
There are still workarounds:
If I were going to donate $500 each to Go Go Guns and to GiveWell, I could throw $500 into DuelGood, see which org it went to, and then donate the other $500 outside DuelGood. I’ve given up nothing (and neither has Go Go Guns). But I potentially moved $500 from No No Guns to GiveWell, and my counterparty got swindled.
Or, if I don’t care about gun issues, saw that my donation wasn’t going to pair, and that it was headed toward Go Go Guns, I could hand a confederate some money with instructions to throw at No No Guns. The end result is that I can still make sure all my money ends up with GiveWell. So i can still play a gambit to try to draw some additional monies to GiveWell without incurring any risk on my end. If I match, my counterparty got swindled into switching from No No Guns to GiveWell without getting anything in return. If I don’t, it’s the same as having given to GiveWell in the first instance.
If DuelGood were a 501(c)(3), donations to it would probably be tax deductible, but it could generally not re-donate to non-501(c)(3) organizations. And a lot of the potential advocacy organizations being neutralized would be 501(c)(4) organizations.
Thank you, Jason! Until we can find a mitigation, we’ll update our website to inform donors about the problems you found. We appreciate your thoughtful contributions :)
Severely, unless you can find a mitigation.
Each user has near-perfect knowledge of what they were going to do anyway. They can guess at the swindle rate—the rate at which counterparties play games to various sorts that prevent an honest/equal mutual neutralization. You describe one swindle, but there are other variants as well.
Unfortunately, the incentive for swindlers to participate is stronger than the incentive for honest players. The honest player is trading a known donation to Go Go Guns for a possibility of averting a contribution to No No Guns. The swindler is giving up nothing and only has an upside. That doesn’t strike me as a stable equilibrium.
A partial fix would be to require users to hand over the money when listing on the site with instructions to forward it to Go Go Guns unless someone who had conditionally committed to No No Guns pairs with them. This would reflect the true preference of an honest player, but would make it harder for someone who was just interested in maximizing donations to GiveWell and was going to counterfactually donate there anyway. Now they must accept the risk of not matching and watching their money sent to Go Go Guns.
But:
This would require more legal/accounting work for DuelGood, could make certain types of donations impossible (e.g. hard money political donations), and could cost donors tax writeoffs.[1]
There are still workarounds:
If I were going to donate $500 each to Go Go Guns and to GiveWell, I could throw $500 into DuelGood, see which org it went to, and then donate the other $500 outside DuelGood. I’ve given up nothing (and neither has Go Go Guns). But I potentially moved $500 from No No Guns to GiveWell, and my counterparty got swindled.
Or, if I don’t care about gun issues, saw that my donation wasn’t going to pair, and that it was headed toward Go Go Guns, I could hand a confederate some money with instructions to throw at No No Guns. The end result is that I can still make sure all my money ends up with GiveWell. So i can still play a gambit to try to draw some additional monies to GiveWell without incurring any risk on my end. If I match, my counterparty got swindled into switching from No No Guns to GiveWell without getting anything in return. If I don’t, it’s the same as having given to GiveWell in the first instance.
If DuelGood were a 501(c)(3), donations to it would probably be tax deductible, but it could generally not re-donate to non-501(c)(3) organizations. And a lot of the potential advocacy organizations being neutralized would be 501(c)(4) organizations.
Thank you, Jason! Until we can find a mitigation, we’ll update our website to inform donors about the problems you found. We appreciate your thoughtful contributions :)