Demonic Social Welfare: Quine, Thermodynamics, and Bounded Rationality

This paper develops a comprehensive, multi-layered framework integrating thermodynamics, game theory, fuzzy logic, and self-referential information theory to analyze social welfare in systems with self-referential agents (Quine agents) and bounded rationality. We formalize the concept of 'Demonic Agents' as actors capable of manipulating, erasing, and reproducing their information states, analogous to Maxwell's demon. Using probabilistic phase entropy and fuzzy action distributions, we rigorously prove that social welfare (SW) is globally superior to Nash equilibria (NE), bounded, and foundational, even in worlds without overt demons. Quine self-replication ensures irreducible, non-trivial information for all agents, making every agent inherently demonic and capable of shaping collective outcomes. The model integrates economic allocation mechanisms inspired by Nakamoto (2008), including Bitcoin-based anchors, the genesis hash, and dynamic fairness mechanisms.