Digital Piracy, Teens, and the Source of Advice: An Experimental Study

We conduct an experiment in the lab to determine the effect of varying the source of piracy advice on music consumer behavior. By using teenagers and parents in our subject pool, we increase the realism of the piracy context by sampling potential pirates and their parents. Our treatments represent various sources of piracy advice (e.g., the teen’s parent, a record label, or an external regulator). Subjects make their decisions playing our new experimental game – The Piracy Game – which is extended from the volunteer’s dilemma literature. Interestingly, subjects respond negatively to advice from record labels over time, purchasing fewer songs compared to when the advice is received from other sources such as the subject’s parent. The existence of the social tie between the advisor and the subject assists in mitigating piracy, especially when the source of advice is a parent facing potential penalties due to his/her child’s behavior. An external regulator, who has no social with the advisee and has no stake in the decision of the advisee, provides the least credible source of advice and leads to the greatest amount of piracy.