Hi Greg, Thanks for the very thoughtful and patient response. I really do appreciate you taking the time to be very clear about the issue you’re proposing. I wrote a more detailed version of the game theory but, for now, I’m not posting it because I want to make sure it’s not irresponsible.

But I feel a little safe down here in the comments section so let me just say (in this edit), that the smart contract’s function is producing “ex post incentive compatibility”. The contract itself does not need to execute anything other than a publicly verifiable punishment for losing. Technically you just need to produce credible common knowledge that you’re committed to winning at all costs.