Pirates Acting for the Public Good: An Experimental Study

We study the structure of online peer-to-peer piracy (illicit file sharing) to show that cooperation for a public good can be established and self-sustained without exogenous intervention and despite costly entry. We use laboratory experiments to study realtime contribution strategies in a continuous public good game with endogenous group formation. We show that even when subjects must pay to access the public good and the breakeven point requires at least half of the participants contribute to it, it is still possible to achieve a cooperative outcome. For this to happen, cooperation must be established early in the game. Once established, cooperation lasts late into each session. Natural language communication is crucial: when subjects communicate via anonymous instant messaging, they achieve equivalent levels of cooperation (with and without costly entry) amounting to contributions of 80% of their total endowment. Despite the rich signaling possibilities offered by variations in real-time contribution rates, cooperation is significantly lower absent the ability to communicate with words. ∗The author thanks Prof. John Morgan and Carlos Cueva for crucial guidance and insightful comments. This research is made possible by the generous financial support of Bob and Colleen Haas and the sponsorship of Prof. Jochen Menges who advocated for the author’s stay at the University of Cambridge. The author also thanks Prof. Dan Friedman for allowing the use of ConG, a program developed by the UCSC Leeps Lab, and James Pettit in his assistance with this program.