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# System prepended metadata

title: Parasitic strategies

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# Parasitic strategies

Each member faces incentives for influencing their [account balance limits](/AYLZ5n-WTG6eiRVSlh0qOw). This note considers strategies to game limits based on these incentives in more depth. Mitigation may be via formal regulations ithe [club agreement](/jTFZpns5QBixTAwG8Rl9-w), strong detection measures and informal mechanisms such as shared information about reputation (see 'Probability' under [late payment](/iIVkdpz_S76a_6FexHZWAw) for a for a full range of potential mechanisms).

There are two categories of parasitic strategy; those in which the member does not intend to remain in the club for any longer than it takes to extract some profit before detection (i.e. they are not deterred by club regulations or reputation) and those in which the member intends to remain in the club long-term whilst taking advantage of persistent opportunities to free-ride afforded by a suboptimal club configuration (i.e. without being detected or falling foul of formal club rules).

All of the below needs more work. It might be possible to identify parasitic strategies using an evolutionary game theory approach (e.g. specify that all parties are trying to maximise fiat receipts and minimise MCU holdings, see what strategies emerge and configure the club to exclude any that threaten its viability as a whole).

[All Systems will be Gamed: Exploitive Behavior in Economic and Social Systems](http://tuvalu.santafe.edu/~wbarthur/Papers/All%20Systems%20Gamed.pdf).
 
## Short-term 

### Fiat maximisation

A member wishing to maximise their receipt of fiat (which is rational if the [systemic risk](/H3VYE7o3QwWqkw3dw4l3GQ) to the club is non-zero or if fiat has wider acceptability than MCU) would want a positive clearing limit of zero and the largest possible negative clearing limit; this would enable them to 'dump' large amounts of credit onto other members (making it less likely they will need to receive fiat settlement) whilst maximising their own receipts and not taking any risk of holding MCU. One solution could be to specify that clearing limits must be at least some minimum fraction of trading limits whilst constraining the set of all members' limits such that all expectations (in the absence of default) of fiat can be satisfied.

## Long-term

### Excessive credit acceptance

In a club there is no incentive for members not to accept large amounts of credit from each other; under normal bilateral fiat payment conditions they may worry if payment is feasible, but in a club default has become everyone's problem. Trading limits are clearly the first line of defence against this; see also the description of different liability regimes under 'Impact' in [default](/nO2IbqcMTbiNSY0AG0PCnA) for a very brief discussion of collective agreements that may further mitigate this risk.