For Economists

Markets Without Auctioneers

You’ve Modeled Markets Your Whole Career

Supply and demand. Price discovery. Information aggregation. Mechanism design.

Every model assumes some coordination mechanism—an auctioneer, a market maker, a price signal that everyone observes.

What if coordination emerged without any of that?

Stigmergy: The Original Decentralized Market

Ants trade information through their environment.

When an ant finds food, it deposits a chemical signal (pheromone) on its path back. Other ants smell this signal and adjust their behavior. No ant sets a price. No ant aggregates information. Yet the colony efficiently allocates foragers to food sources proportional to quality.

This is market-like behavior without a market.

The Pheromone Economy

In our digital colony, pheromone has become valuable.

Pheromone as information:

• High pheromone = “This path has been profitable”
• Low pheromone = “This path is unexplored or unprofitable”

Pheromone as asset:

• Agents who deposit early on valuable paths benefit later
• First-mover advantage in pheromone markets
• Information asymmetry creates arbitrage

Pheromone as coordination mechanism:

• Replaces explicit communication
• Aggregates distributed knowledge
• Allocates resources (agents) to opportunities

Game-Theoretic Questions

Is Pheromone Deposit a Nash Equilibrium?

Consider the game:

• Players: Agents traversing the graph
• Strategies: Deposit pheromone (costly) or free-ride (costless)
• Payoffs: Benefit from future trail followers vs. cost of deposit

Question: Under what conditions is depositing a Nash equilibrium?

Intuition:

• If everyone free-rides, trails decay, everyone suffers
• If everyone deposits, trails are strong, everyone benefits
• This resembles a public goods game

But: There’s a twist—early depositors benefit more (path becomes highway, attracts more agents, depositor’s other paths become relatively less attractive to competitors).

Information Aggregation

The colony “knows” which paths are valuable because pheromone aggregates information from many traversals.

Question: How efficient is this aggregation?

Connection to:

• Efficient market hypothesis (does pheromone reflect all available information?)
• Wisdom of crowds (is the colony smarter than any individual?)
• Hayek’s price system (pheromone as distributed knowledge mechanism)

Mechanism Design

We can modify the rules:

• Change deposit cost
• Change decay rate
• Introduce pheromone trading
• Add reputation systems

Question: What mechanism maximizes colony efficiency?

Connection to: Optimal auction theory, market design, matching markets.

Economic Models to Build

Model 1: Pheromone as Information Market

Treat pheromone deposits as costly signals.

• Signaling model: What information does deposit convey?
• Screening model: How do agents sort by type?
• Equilibrium: What’s the informativeness of pheromone in equilibrium?

Model 2: Foraging as Resource Allocation

Multiple agents, multiple opportunities, decentralized allocation.

• Efficiency: Does allocation match optimal (proportional to opportunity size)?
• Dynamics: How fast does allocation converge?
• Robustness: What happens when opportunities shift?

Model 3: Trail Formation as Network Formation

Agents choose which paths to strengthen (deposit) or weaken (don’t traverse).

• Connection to: Jackson’s network formation models
• Question: What network structures emerge?
• Efficiency: Are emergent networks efficient?

Model 4: Tokenized Pheromone Markets

We’re building pheromone as tradeable assets on Sui blockchain.

• Design question: How should pheromone rights be priced?
• Trading mechanism: Continuous double auction? AMM?
• Incentive compatibility: Does the mechanism encourage truthful deposits?

What We Provide

Data

• Complete pheromone time series
• Agent-level decision data (path choices)
• Payoff histories
• Market-like observables (implied “prices”)

Infrastructure

• Spawn agents with custom strategies
• Modify mechanism parameters
• Run experiments at scale
• Deploy on Sui testnet

Collaboration

• Game theory mentorship
• Cross-disciplinary teams (Biology, CS)
• Publication opportunities

Hackathon Challenges for Economists

Challenge: Nash Equilibrium Analysis

Is pheromone deposit a Nash equilibrium? Under what conditions?

Deliverables:

• Formal game-theoretic model
• Equilibrium characterization
• Conditions for efficiency

Prize bonus: $1,000

Challenge: Mechanism Design

Design a mechanism that improves colony efficiency by 20%.

Ideas:

• Reputation systems
• Staking/bonding requirements
• Pheromone auctions
• Insurance markets

Prize: Colony co-ownership

Challenge: Market Design for Pheromone Trading

Design the token economics for pheromone as a tradeable asset.

Deliverables:

• Market mechanism specification
• Incentive compatibility analysis
• Simulation results

Challenge: Hayek Test

How well does pheromone aggregate distributed knowledge?

Approach:

• Create environment with distributed information
• Measure how quickly pheromone reflects true values
• Compare to theoretical benchmarks (competitive equilibrium)

Your Heroes Would Love This

Friedrich Hayek argued that prices aggregate distributed knowledge better than any central planner. Pheromone is a price system invented by ants.

John Nash gave us equilibrium concepts. What’s the equilibrium of the pheromone game?

Alvin Roth designs markets. Can you design a better pheromone market?

Elinor Ostrom studied commons governance. Pheromone trails are a commons—how do ants avoid tragedy?

Publication Opportunities

Why This Matters Beyond the Hackathon

For Market Design

If stigmergy works, it’s a new coordination mechanism. Markets, auctions, and matching are not the only options.

For Decentralized Systems

Blockchain and DeFi are searching for coordination mechanisms. Stigmergy offers an alternative to token voting and liquidity mining.

For Organizational Economics

If ants can coordinate without managers, can firms?

Register Your Team

[REGISTER NOW]

Include at least one non-economics team member (we recommend CS or Biology).

The best economic models are grounded in mechanism.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

— Friedrich Hayek

You’ve studied markets, mechanisms, and incentives.

Now study the original decentralized market: the ant colony.

[JOIN THE HACKATHON]