That entire statement makes no sense. The returned rewards represent either the same % of the reward pool (if all returned) or a smaller % (if only a portion are returned). There is no way for it to increase. I have no idea what sort of convoluted reasoning has led you to conclude this.
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I've cut corners while explaining my point.
Let's say someone's flag or vote was first worth an infinitesimal part of the reward pool well after the most extreme case imaginable where every single vote is counteracted, well that infinitesimal vote would now control 100% of the pool.
The incentives to defect become greater as more flags are given because flagers become "fewer" or spent and the potential rewards greater.
It's a very convoluted way to make my point and I'm not sure how sound my explanation of it is but hopefully, it's clear enough.
It's good that you are calling me on my half-baked explanation that I had given. I knew when I wrote my answer it wasn't really clear at best and possibly didn't mean much at worst.
Aside from the fact that this situation is contrived and would never happen....you haven't demonstrated anything here. It is just as easy to downvote that vote as all the others, and there is no reason to believe that after all the other votes are counteracted this one wouldn't be too.
You could make a similar argument for non-linear. As votes become more concentrated there is no incentive to vote for anything but the single highest-paid post (even if it is complete and utter garbage/abuse/etc.). Everything else will pay nothing making the vote worthless! It becomes a tyranny of vote-for-the-biggest-or-your-vote-is-worthless.
These extreme cases are not helpful.
Under superlinear, the rewards go disproportionally toward the consensus in the saw way, the flags are disproportionally powerful when cast against the consensus.
Under linear rewards, everyone has, proportionally to their stake, the same incentive to defect (self-vote) as everyone else (except for curation reward), while under superlinear, the biggest shareholders have a disproportional incentive to defect but if too many do, they collapse their own network and Steem net worth. Thus there is an incentive for them to police each other. It is mathematically possible for them to effectively police each other unlike under linear reward.
Under linear everyone has the same incentive to defect and thus no incentive to flag. Expecting more flags to be given when there are no incentives for flags goes against logic.
This part is totally bogus. There is no body of 'biggest shareholders' and most if not all generally believe they can gain personal advantage and not worry about the whole. That is human nature and demonstrated time and time again including on Steem.
Possibly if you had a much higher actual stake concentration of one or a few truly dominant stakeholders AND it were stable AND there weren't ways to cheat the cartel and get away with it (all false) then it might be valid. But in reality it isn't even that. We have whales with maybe a few percent of stake at most which are far to small. Even whales for practical purposes just end up being regular users most of the time, albeit with bigger votes.
There is no meaningful difference in incentives to downvote when someone has 1% stake holding vs. 0.00001% stake. In either case it is done almost entirely to express an opinion with limited to negligible direct economic incentive or impact. Both may also feel some sort desire to do good for the platform, but it is primarily emotional and not economic, in both cases.
Continuing to quote the white paper on this is entirely boring because experience shows otherwise. When theory conflicts with data revise the theory.
The only benefit I've ever been convinced of from superlinear is reducing dust farming, which to be fair is not nothing, particularly given the lack of any robust incentive for any individual to care about or take action against abuse (see above). The other arguments don't hold up.
Also, the 'defect' terminology really doesn't make sense here. There is no clearly defined cooperation criteria. A system like this is too large and complex and too subject to differing opinions and attitudes over what constitutes mutually beneficial cooperation (as well as the nature and magnitude of any benefits to be achieved therefrom) for cooperate-vs-defect to be a useful label IMO. If people can't even agree on what it means to cooperate, they can't decide whether to cooperate or defect. The entire model is inapplicable.
I stand behind the original whitepaper's argument. We disagree. My commentary made on my original post has inexactitudes and I plan on possibly strike them through.
Dust farming is vote farming. I don't see why some votes should be left out.
This is also true for superlinear rewards but under superlinear rewards, consensus influences the distribution of rewards and flags and thus every vote and flag influence one another which isn't so under linear rewards.
In the long run, if the platform, Steem price doesn't perform well then the biggest holders lose more from gaming the system then the price drop.
Getting paid for 0 work is the only detrimental "work" being done. Any work however controversial has value. To defect is to create 0 work i.e. exploit a loophole if one exists and abuse it as long as possible at the detriment of the whole.
As the price increase, the incentive to defect (i.e. self-upvote) grows and flags don't solve this as the flags simply return the reward to the reward pool, making it bigger proportionally to the number of people remaining eligible for it.
As a whole, the smaller the voters, the easier for them to defect without being caught.
I'm still very much enjoying this conversation as I think it's very much important and it really seems like you care even though we might disagree in the end.
Then you are either a fool or irrational. To continue to stand by a theory when observed data don't agree is not the basis for any conversation I care to have.
At a minimum it needs: a) a reasoned explanation for the discrepancies, and b) additional qualifications and refinement to agree with new observations.
Come up with a theory that is predictive and also explains observed behavior. I will be happy to discuss it. The refuted white paper theories not so much.
Everyone does. There is no special role for 'the biggest holders' here (even if that term were defined, which it isn't).
Let me clarify that. Superlinear reduces the quantity of content that people need to consider downvoting. That's beneficial as a labor saving device.
Provide a formal disproval of what is in the whitepaper. We disagree on the data but you haven't provided any holistic data.
Someone losing millions of dollars from Steem price drop does lose more than someone who loses only a couple of dollars. They lose the same proportion but that's not what I was arguing.
I stand by those who say the whitepaper theory hasn't been properly refuted. I hope you can respect that. This is my honest conclusion from my limited human mind.