Indirect Reciprocity in Contributions to a Peer-to-Peer Music Sharing Network - An Empirical Analysis of Individual Level Data

This study assesses the influence of indirect reciprocity on individual contribution to a peer-topeer network. We find that individuals’ level of contributions increases with number of contributors in the peer-to-peer network but decrease with number of free riders in the networks, indicating that individual contributions are reciprocal in nature. Moreover, we show that individuals have strong incentive to punish free riders and reward contributors in the peer-to-peer network. They do so through the setting of servers that allows discrimination among downloaders. When number of free riders increases, individuals are more likely to change the server settings to provide priority services to contributors and lesser services to free riders. The phenomena are consistent with findings from economic experiments which suggest that reciprocity and the ability to punish free riders could sustain contribution to pubic goods. The findings have important implications on the design and practical management of peer-to-peer networks.