Grolleau, Mzoughi and Sutan (2008)
|Grolleau, Mzoughi and Sutan (2008)|
|Title:||Please do not pirate it, you will rob the poor! An experimental investigation on the effect of charitable donations on piracy|
|Author(s):||Grolleau, G., Mzoughi, N., Sutan, A.|
|Citation:||Grolleau, G., Mzoughi, N., & Sutan, A. (2008). Please do not pirate it, you will rob the poor! An experimental investigation on the effect of charitable donations on piracy. The Journal of Socio-Economics, 37(6), 2417-2426.|
|Link(s):||Definitive , Open Access|
|Key Related Studies:|
|About the Data|
|Data Description:||In April 2006, a market survey was conducted with a representative sample of 168 people in the metropolitan areaof Dijon, France. The sample is gender-balanced with 48% female and 52% male, with a mean age of 21 years. The survey was based on a 40-item questionnaire related to music piracy and individual characteristics. The survey was conducted on a face-to-face basis.
The experiment was a standard public good game. The experimental market was composed of two types of participants: consumers and record producers. The experiment was completely decontextualized: endowments, profits and donations were printed on different colored tickets, and no reference was made to CDs or donations. At the beginning of the experiment, all agents received an endowment in colored tickets. These colored tickets were exchanged for money at the end of the experiment following a set of rules. Each consumer was given yellow tickets. Half of the “consumers” were given a large endowment and the other half a (very) low endowment. Each record producer was given red tickets. An official exchange rate (yellow tickets into red tickets) was given and all rules were made public to the participants. We focused on “consumer” behavior in this experimental market. The consumers had to exchange their yellow tickets for red tickets. Red tickets held by “consumers” at the end of each session were exchanged for real money at a 1-to-1 basis (1 red ticket = 1 euro). The record producers had to exchange their red tickets for yellow tickets. Each yellow ticket held by a “producer” at the end of a session was exchanged for .66 euro. The sessions were organized as follows: 21 participants were involved in a session. The experiment took place in two different rooms (A and B). The participants were split into two groups, 20 consumers were in room A and one producer was in room B. Three sessions (one per treatment) were conducted with 63 participants in April 2006 in the Business School of Burgundy in Dijon. Participants were students in various fields and at various levels in schools and universities of Dijon. They received a show-up fee of 5 euro (s= 5) and the money earned during the experiment. The experiment lasted 45 min and participants earned between 5 euro and 25 euro.
|Data Type:||Primary data|
|Secondary Data Sources:|
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|Data Analysis Methods:|
|Cross Country Study?:||No|
|Government or policy study?:|
|Time Period(s) of Collection:||
Producers in the recording industry frequently market products for which a part of the proceeds goes to charitable causes. We investigate whether a corporate pledge to donate a portion of profits to a charitable cause will decrease the extent to which customers illegally obtain that company's products. Donations to charitable causes may increase the moral intensity of piracy (robbing the poor rather than robbing the rich) and consequently may reduce the willingness to pirate. This rationale is empirically tested through a dual empirical strategy, that is, a market survey and a laboratory experiment. We show that market piracy decreases when a very low or very high donation mechanism is implemented. Nevertheless, for intermediate levels of transfer, piracy increases again.
Main Results of the Study
Main results of the study:
- The hypothesis "Donation to social causes reduces piracy" is confirmed since the level of piracy is lower when a donation mechanism is present
- Consequently, the number of real exchanges is higher in the experimental session in which a donation mechanism is implemented. When no donation mechanism is implemented, the number of exchanges is the lowest, the rate of piracy (measured by the non-respect of the official exchange rate) is the highest, the stated and effective exchange rate are the lowest, and, the level of ethical dissonance is the lowest.
- In sum, donation does not reduce piracy for intermediate levels of transfer, which partly supports hypothesis "The higher the donation level, the lower the piracy rate."
- This result is consistent with the market survey, in which some individuals argued that profit-oriented firms are unlikely to devote intermediate or high percentages of proceeds to charitable causes. The relationship between donations (as a percentage of proceeds) and the level of piracy seems to follow a roughly U-shaped curve.
- This result can be intuitively interpreted in terms of piracy elasticity. Piracy elasticity for a given product measures the responsiveness of piracy of this product to a given change in the amount of donations, which can be expressed as the percentage of the proceeds devoted to a social cause.
Policy Implications as Stated By Author
- Donations to charitable causes can be “instrumentalized” by pirated firms or may simply constitute a byproduct of other motivations such as improving the company’s image or altruistic behavior. In the latter, the reduction in piracy can be considered as an unintended effect.
- The percentage of proceeds devoted to the social cause and the characteristics of the social cause are likely to influence the extent to which pirates modify their behavior.
- Without neglecting capitalistic (e.g., technological devices preventing fraudulent copies) and regulatory alternatives (e.g., monitoring investments, lobbying for severe sanctions against pirates), taking into account psychological and moral factors may lead managers to increase “moral barriers” for pirates and/or to align pirates’ moral incentives with the firm’s interests. The strategic use of charitable causes to increase the moral intensity of piracy requires comprehensive knowledge of pirates and of their perceptions of different causes.
Coverage of Study
|Level of aggregation:||Individual|
|Period of material under study:||April 2006|
|Level of aggregation:||University students|
|Period of material under study:||April 2006|