The Conflictoring Capture-Allocation Mechanism

One uncapturable mover can put W back into the game

Conflictoring repairs Hollow Wins (0,1,1) by changing the incumbent's task. The incumbent no longer captures one Pigovian planner. It must foreclose every pathway by which a privately rewarded actor can carry the excluded system-welfare coordinate W into view.

• The six channels are whistleblower, plaintiff, regulator, legislator, investor, and supranational challenger.
• The theorem requires at least one mover whose private reward exceeds cost and whose capture cost is not finite and complete.
• The mover need not be benevolent. The mechanism is adversarial.

The Pigovian fix is itself a capture target

The paper starts from the public-choice objection to standard externality remedies. A tax, property right, or liability rule assigned by a single planner can be neutralized by the same incumbent that profits from excluding W.

• Stigler, Peltzman, and Laffont-Tirole supply the capture problem: regulated firms can lobby regulators, legislators, and supranational bodies.
• The Hollow Win survives when both transactional parties gain while the system fails.
• Conflictoring does not assume heroic public administration. It routes around the single regulatory node.

Capture is channel-specific, so redundancy has value

The mechanism partitions challengers by the technology needed to stop them. Lobbying may reach the regulatory bloc, but it does not automatically silence an employee, defeat a tort claim, or stop an outside investor from publishing adverse research.

• Regulatory bloc: regulator, legislator, supranational challenger, captured through correlated lobbying technologies.
• Private bloc: whistleblower, plaintiff, investor, captured through silencing, litigation defense, or market operations.
• W fails to be carried only if every challenger's move fails.

Proposition C.0 derives the activist short-seller's alignment from publication

The paper separates passive investors from activist short funds. A passive investor can free-ride by accumulating silently. The activist short fund profits by publishing the β_W computation after taking a short position, so the profit act and the W-carrying act are the same act.

• The paper names the Hindenburg and Muddy Waters model: take a short position, publish adverse research, profit on post-publication repricing.
• The activist bears short-interval carry rτ, not years of uncertain-catalyst carry.
• Publication moves capital away from the high-β_W activity when markets reprice the disclosed risk.

The investor channel does not wait for a verdict or statute

The activist's immediate reward comes from disclosure-driven stranded-asset and transition revaluation. The paper claims this component is upstream of courts and regulators because it depends on investor coordination, not on a liability rule firing first.

• Pre-disclosure price embeds β_W=0.
• Post-disclosure price embeds the assessed restoration hazard, so ΔP<0 and the short captures -ΔP>0.
• The slower verdict-driven component of -ΔP is explicitly not claimed as upstream.

Proposition C.1a makes full capture too expensive at the margin

The incumbent chooses capture intensities qk to maximize Π∏Qk(qk) minus convex capture costs. If one node has marginal capture cost c′(q) going to infinity before full foreclosure, the incumbent stops short of Qk=1 at the optimum.

• The marginal foreclosure benefit at the un-foreclosable node is finite and bounded by Π.
• The marginal cost diverges before the node reaches full failure probability.
• Therefore Pr[W carried]=1-∏Qk(q*k)>0 at any optimum.

Proposition C.1b beats the single planner when cross-bloc correlation is low enough

Adding the private bloc forces the incumbent to divide a convex-cost suppression budget across more nodes. Conflictoring strictly beats the single-planner benchmark when the cross-bloc cost term is smaller than the private bloc's added foreclosure resistance.

• The single-planner benchmark is the regulatory-bloc optimum QR*.
• The private bloc contributes ∏P Qk(q*k)<1 by C.1a applied within that bloc.
• The empirical hinge is ρRP and the curvature of c(·). Dominance can fail when the same balance sheet funds all suppression as near substitutes.

Proposition C.3 makes detection part of the same capture game

The incumbent also suppresses detection probability p. The paper adds a detection-suppression choice σ to the same convex budget that funds capture of movers.

• The incumbent maximizes capture value plus concealment value minus joint cost C( qk ,σ).
• If one capture node and one detection channel are un-foreclosable, then Pr[W carried]>0 and p(σ*)>0 simultaneously.
• Decision Accounting's condition becomes p*L≥κ with p* generated inside the adversary's optimization problem.

The mechanism fails when every path can be cheaply closed

Conflictoring is a reachability result, not a universal cure. It needs at least one live mover, evidence that can travel, and a private reward large enough to cover discovery, retaliation, carry, or litigation costs.

• Failure case: every mover can be captured at finite and complete cost.
• Failure case: the incumbent suppresses the underlying public evidence below the activist's detection cost.
• The paper has no empirical β_W tile and is presented as a draft theory statement for GEB.

Ask students to identify the first mover and the incumbent's foreclosure move

The classroom exercise should stay inside the paper's mechanism. Students map a domain across the six channels, then test whether any channel has private reward, evidence access, and non-complete foreclosure.

• Investor: disclosure and repricing before liability.
• Plaintiff: liability as activation energy, with capture through litigation defense.
• Regulator, legislator, supranational: public action under correlated lobbying capture.