Quote from: jonny1000 on June 10, 2015, 11:05:13 PM

Quote from: Meni Rosenfeld on June 10, 2015, 05:09:37 PM

the reason for each individual miner to create supersized blocks is not that he hopes others will do the same. It's simply because it's more profitable for him to do so, regardless of what the others do. This is not the prisoner's dilemma, where there is a conflict between selfish desires and the greater good.

I apologize for making this even more academic, however this is a complex proposal and there will always be games and ways of analyzing this which are analogous to the prisoner's dilemma. For example a large miner (A) could consider that producing a smaller block leaves more transactions in the meme pool, such that another miner (B) would be incentivised to produce a larger block and pay a larger penalty and this would increase the rollover pool, which large miner A could collect.

Miners want to maximize their (tx fees - X * penalty) + collection +- X * impact the decision has on other miners block sizes and the associated penalty's

X = projected share of the network hashing power

That's indeed a possibility. I've run the calculation for a big miner that tries to do this (in the 90%/1% scenario), and found that it's optimal for him to put 7004 txs/block, which then causes the small miners to put 5955 txs/block. This bumps the big miner's reward to 4.719 BTC/block (from 4.685). So the effect exists, but is fairly small; also, this strategy is not a Nash equilibrium, so it will probably not be very stable.

Quote from: jonny1000 on June 10, 2015, 11:05:13 PM

Quote from: DumbFruit on June 10, 2015, 06:28:07 PM

That's not the point. What prevents the competition from pulling from the pool without contributing to it? I understand that it's in the interest of a massive node or cartel of nodes to mine large blocks, but only if they aren't undermined by their competitors, which can pull from the pool without paying any penalty themselves.

Nothing prevents miners leaving pools. Is that not desirable? This could potentially be a great characteristic of Meni's proposal. Undermining a large cartel of miners in favor of smaller miners seems great. (I don't know if Meni thought of this when he made the proposal, or it was kind of luck?)

Just to make sure everything is clear, the penalty pool is not related to mining pools, despite the usage of the word "pool". I have not talked about mining pools in this discussion.