Assessment Overview: This rubric evaluates students' ability to analyze real-world cryptoeconomic failures using game theory and mechanism design concepts from L07. The assignment assesses analytical depth, application of formal concepts, quality of proposed improvements, and communication skills.

Point Distribution Summary

Component Points Percentage
Written Analysis (8 points)
Phase 1: Timeline Reconstruction 2 20%
Phase 2: Root Cause Analysis 3 30%
Phase 3: Mechanism Improvements 3 30%
Presentation (2 points)
Presentation Clarity & Q&A 2 20%
TOTAL 10 100%

Detailed Rubric

Phase 1: Timeline Reconstruction (2 points)

Timeline Accuracy and Completeness
2 points: Accurate timeline covering all key dates with:
  • Events described in student's own words (not just copied)
  • Key actors and their motivations identified at each stage
  • Game-theoretic dynamics noted (e.g., "bank run coordination," "death spiral feedback loop")
  • Point of no return clearly identified and justified
1 point: Timeline covers most key dates but is incomplete or:
  • Missing actor incentive analysis at key moments
  • Game-theoretic dynamics not explicitly identified
  • Point of no return not identified or poorly justified
0 points: Timeline is largely copied from instructions, missing major events, or contains significant factual errors

Phase 2: Root Cause Analysis (3 points)

Application of Game Theory and Mechanism Design Concepts
3 points: Exceptional analysis demonstrating:
  • Specific mechanism design flaw clearly articulated (e.g., "reflexive token economics created a positive feedback loop where rational selling accelerated the death spiral")
  • Nash equilibrium analysis: explains why collapse was an equilibrium outcome
  • At least 2 formal L07 concepts correctly applied (incentive compatibility, dominant strategies, moral hazard, adverse selection, commitment devices)
  • Trust assumptions that were violated explicitly identified
2 points: Good analysis with:
  • Core mechanism design flaw identified but explanation lacks formal rigor
  • At least 1 L07 concept correctly applied
  • Some discussion of incentive misalignment but without formal payoff analysis
1 point: Basic analysis that:
  • Identifies that "something went wrong" but without formal framework
  • Relies on narrative description rather than game-theoretic reasoning
  • L07 concepts mentioned but not correctly applied
0 points: No analysis, purely narrative summary without any application of course concepts, or fundamental misunderstanding of the event

Phase 3: Mechanism Improvements (3 points)

Quality of Proposed Improvements
3 points: Two well-developed proposals, each demonstrating:
  • Concrete, specific, and implementable (not vague platitudes)
  • Clear explanation of how the proposal changes incentive structure or payoff matrix
  • Honest trade-off analysis: what new risks or costs does this introduce?
  • Reference to relevant L07 concept (e.g., "this serves as a commitment device")
2 points: Two proposals present, but:
  • One proposal is strong, the other is vague or not well-developed
  • Trade-off analysis is thin or missing for one proposal
  • Connection to L07 concepts is implicit rather than explicit
1 point: Only one viable proposal, or two proposals that are:
  • Too vague to be implementable (e.g., "better regulation," "more transparency")
  • Missing incentive analysis -- how does this change actor behavior?
  • No trade-off discussion
0 points: No proposals, or proposals that fundamentally misunderstand the failure mode (e.g., proposing a fix for the wrong problem)

Presentation (2 points)

Communication Clarity and Q&A
2 points: Presentation demonstrates:
  • Clear, well-organized 5-minute delivery (within +/-30 seconds)
  • Key findings communicated without jargon overload
  • Engages audience with the story of the failure
  • Answers peer questions accurately and thoughtfully
1 point: Presentation is:
  • Somewhat disorganized or significantly over/under time
  • Core message is present but delivery is unclear
  • Struggles with Q&A or provides vague answers
0 points: Did not present, or presentation is incomprehensible, completely off-topic, or shows no preparation

Grading Scale

Grade Points Percentage Description
A 9-10 90-100% Exceptional analysis with rigorous application of game theory; concrete, well-reasoned proposals; excellent presentation
B 8 80-89% Good analysis with solid concept application; proposals are reasonable but may lack depth in trade-offs
C 7 70-79% Satisfactory work with some concept application; proposals present but underdeveloped
D 6 60-69% Narrative summary with minimal analysis; weak or vague proposals
F 0-5 <60% Incomplete, factually incorrect, or no application of course concepts

Additional Grading Guidelines

Cross-Event Fairness

  • All three events are equally valid choices. Do not penalize students for choosing one event over another.
  • Terra/Luna: Most directly involves mechanism design (algorithmic stablecoin). Students may find it easier to apply formal concepts.
  • FTX: Most directly involves trust and principal-agent problems. Requires students to distinguish between mechanism failure and fraud.
  • The DAO: Most directly involves smart contract security and governance. Connects well to A07 (Audit Challenge).

Academic Integrity

  • External sources: Students may use course materials, news articles, and publicly available analyses
  • Original analysis required: The root cause analysis and mechanism improvements must be in the student's own words and reasoning
  • AI tools: May be used for research but final analysis must demonstrate personal understanding of L07 concepts
  • Plagiarism: Copying analysis from published reports without attribution results in 0 points
Instructor Notes:
  • The best student work will surprise you -- look for novel connections between the event and L07 concepts
  • Reward students who identify trade-offs in their own proposals (self-awareness of limitations)
  • A student who correctly argues that a failure was not a mechanism design problem (e.g., FTX as pure fraud) deserves credit for nuanced thinking
  • Partial credit is appropriate when students show understanding of the event even if formal concept application is imperfect

© Joerg Osterrieder 2025-2026. All rights reserved.