NDAI Agreements
Reference: Stephenson, Miller, Sun, Annem & Parikh (2025). NDAI Agreements. arXiv:2502.07924 (UIUC; Cornell Tech; et al.). URL.
Summary
The “NDAI agreement” — non-disclosure AI agreement — is a mechanism in which a TEE combined with an AI agent jointly stands in for a trusted human intermediary, resolving the classical disclosure–appropriation paradox of information markets first identified by Arrow (1962) and Nelson (1959). An inventor cannot reveal an idea to a potential investor without risking misappropriation; without revealing it, no efficient bargain can be struck. The result is well-known: under-disclosure, under-investment, under-licensing.
Stephenson et al. show formally — via a buyer/seller bargaining game — that delegating the disclosure-and-payment decision to a tamper-proof program running inside a TEE eliminates the hold-up problem, achieving full disclosure and an efficient ex post transfer. When the invention’s value exceeds the value a TEE can fully secure (e.g. because some leakage is unavoidable), partial disclosure still strictly improves welfare over the no-disclosure equilibrium. They then model agent error — payments or disclosures going wrong — and prove that simple safeguards (budget caps, acceptance thresholds) preserve most of the efficiency gains.
The substantive economic claim is that TEE + AI behave as an “ironclad NDA”: a credible commitment device for the disclosure problem that was previously unattainable with paper contracts (because expropriation is unverifiable) or with cryptography alone (because invention value is unbounded and the seller’s information is a complex unstructured artefact). The result links the Mechanism Design / Hold-Up Problem tradition to AI-agent infrastructure, and gives a sharp theoretical case for the economic value of trusted model environments and confidential-compute hardware as agent-economy substrates.
Key Ideas
- Formalises the Arrow–Nelson information paradox / hold-up problem in a bargaining model between seller (inventor) and buyer (investor).
- TEEs + AI agents delegate disclosure and payment to tamper-proof programs that neither party can subvert; this implements an ex-ante commitment device unavailable under classical contracts.
- Full-disclosure efficient equilibrium under the NDAI when the invention’s value lies within what the TEE can secure.
- Partial disclosure dominates no-disclosure even when full security is impossible: high-value inventions still get partially revealed in welfare-improving ways.
- Models agent imperfection: errors in payment or disclosure can occur; budget caps and acceptance thresholds bound the damage and preserve most welfare.
- Frames TEEs+AI as an “ironclad NDA”: a cryptographically/hardware-enforced commitment that traditional NDAs cannot match.
- Policy implications for R&D Commercialisation, Technology Transfer, and inter-firm collaboration; bridges economic theory to confidential-compute hardware.
Connections
Conceptual Contribution