Contract Signing, Optimism, and Advantage

A contract signing protocol lets two parties exchange digital signatures on a pre-agreed text. Optimistic contract signing protocols enable the signers to do so without invoking a trusted third party. However, an adjudicating third party remains available should one or both signers seek timely resolution. We analyze optimistic contract signing protocols using a game-theoretic approach and prove a fundamental impossibility result: in any fair, optimistic, timely protocol, an optimistic player yields an advantage to the opponent. The proof relies on a careful characterization of optimistic play that postpones communication to the third party. © 2004 Elsevier Inc. All rights reserved.