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People pirate because they can and because when factoring in the punishment and the chance of getting caught they come out ahead by pirating. Let's say that a

People pirate because they can and because when factoring in the punishment and the chance of getting caught they come out ahead by pirating. Let's say that a piece of software has price p and that you get value v from it. If v > p, then you will choose to buy it, getting v - p in consumer surplus. If v < p, then you choose not to buy it. Now let's say that you can pirate the software as well, with chance of getting caught c and punishment if caught d. Pirating the software costs 0. If p > c * d then it's economically rational to pirate it, getting overall value v - c * d.

decode 17y ago
You're basically asserting that people are rational agents doing subconscious (or perhaps conscious) algebra in their heads. I thought we learned long ago that people are not rational agents. Sometimes it is useful to model people as rational agents, and sometimes not. But to say that people are actually motivated, in a real factual sense, by some cost equation, just doesn't correspond to reality.
- jacoblyles 17y ago
  People respond to incentives. Sometimes in strange ways, at the edges. But mostly they do.
richardw 17y ago
So why do so many people not pirate software? If you think it's just because they don't know how, then you're wrong. I suggest because of their own sense of fairness. Most would not get caught but they still feel it's right to pay a software author for what they have created. Some cultures (currently) have more of this sense than others - e.g. the U.S. more than China.
- joeyo 17y ago
  I'd posit because the the product in the case of pirated or black-market software is almost always clearly inferior to the original software-- it has been cracked and changed in various undefined and poorly understood ways (certainly to the average person). There is some chance the pirated software will give you a virus, or be fake, etc. There is uncertainty about the product and people are naturally uneasy about it. I suspect a similar reason for why most people don't buy black market goods: pirated handbags or knock-off electronics brands, for example. The quality is perceived as worse, or at least unknown. Digital media (movies, music) on the other hand are more widely understood to be "exact" copies of the original and so there is less concern about the quality of the illegitimate good, to the point that it isn't considered illegitimate.

decode 17y ago

You're basically asserting that people are rational agents doing subconscious (or perhaps conscious) algebra in their heads. I thought we learned long ago that people are not rational agents. Sometimes it is useful to model people as rational agents, and sometimes not. But to say that people are actually motivated, in a real factual sense, by some cost equation, just doesn't correspond to reality.

jacoblyles 17y ago
People respond to incentives. Sometimes in strange ways, at the edges. But mostly they do.

richardw 17y ago

So why do so many people not pirate software? If you think it's just because they don't know how, then you're wrong. I suggest because of their own sense of fairness. Most would not get caught but they still feel it's right to pay a software author for what they have created. Some cultures (currently) have more of this sense than others - e.g. the U.S. more than China.

joeyo 17y ago
I'd posit because the the product in the case of pirated or black-market software is almost always clearly inferior to the original software-- it has been cracked and changed in various undefined and poorly understood ways (certainly to the average person). There is some chance the pirated software will give you a virus, or be fake, etc. There is uncertainty about the product and people are naturally uneasy about it. I suspect a similar reason for why most people don't buy black market goods: pirated handbags or knock-off electronics brands, for example. The quality is perceived as worse, or at least unknown. Digital media (movies, music) on the other hand are more widely understood to be "exact" copies of the original and so there is less concern about the quality of the illegitimate good, to the point that it isn't considered illegitimate.