The problem of piracy from the point of view of utilitarianism or when it is profitable to use an unlicensed product
Recently, more and more attention has been paid to the issue of piracy and the fight against this phenomenon. However, the majority of individuals on whom the choice of a priority strategy to solve this problem mainly depends, such as media companies or government officials, tend simply to develop a more sophisticated punitive mechanism, without admitting that this may be a non-optimal solution.
In this article, the problem of piracy will be considered from the position of utilitarianism, which will allow you to demonstrate, if not the complete inconsistency of the most popular concept, then at least its ambiguity. The material was written for the general public, therefore, from the point of view of strict economic theory has a number of significant simplifications and inaccuracies. For this reason, people versed in the methodology of microeconomic analysis to read this text is not recommended in order to avoid fair resentment.
Immediately it should be noted that in the future we will proceed from the existing legal norms, that is, abstract arguments about the injustice of the modern copyright system will be left outside the scope of this article. Of course, there are quite interesting arguments in favor of the need to revise the entire system, but naively hopes that the authorities of most countries are ready to accept such radical ideas today or tomorrow.
First of all, let us take as an axiom that piracy is an absolutely rational activity, and not some marginal behavior of all participants in this process. Of course, there are certainly a number of people participating in this for some irrational reasons, but this is an absolute minority. In the end, despite the existence of kleptomania, theft is interpreted in society quite clearly.
Now we will identify the main reason for the commission of any illegal act, including piracy.
In most cases, each individual has well-defined information about the benefits he will receive from committing a wrongful act, about the approximate punishment that is due to him in the event of a capture, and about the approximate probability of this capture. This knowledge may not necessarily be in the form of specific numbers, but an intuitive understanding of these categories and their relative values, as a rule, is present in all members of society.
Denoting these three quantities as Y, p, and F, we can get the following inequality:
Y> p * F
This inequality is a prerequisite for committing a deliberate crime. That is, in simple words, a crime occurs only when the potential benefit of committing it exceeds the risk of potential punishment.
It may seem to some that everything is too simplified and in reality there are far fewer crimes than cases of compliance with this condition.
In this case, let Y = l - m, where l - these are specific material benefits, and m - the moral agony of committing a crime. That is, in some cases, Y is simply negative due to the moral considerations of the individual, which makes the offense unprofitable from the very beginning.
When it comes to piracy, it is quite possible to say that the value of p, that is, the likelihood of punishment, is quite small, at least it was at the dawn of the development of this market, and it remains so in many countries until today.
Thus, due to the fact that the risk of being punished for the distribution and use of an unlicensed product, as a rule, is extremely small, the above condition is observed almost always, which causes such a prevalence of offenses in this area.
Of course, few people argue on this topic, imagining various formulas, but an intuitive understanding of this is inherent in almost all members of society. That is why the most obvious answer to the question “How to fight against piracy” is “It is necessary to punish the pirates more strictly”.
That is, returning to the mathematical description, if we increase F, the right side of the inequality will increase and the condition will be met in fewer cases. Of course, the logic is correct, but do not forget about other values.
Just because the answer about toughening punishment for the majority is the most obvious, it is this anti-piracy strategy that has become a priority in modern society, especially thanks to those who, frankly, can hardly claim to be an expert in these matters, although by the will of fate, has a certain influence on the choice of a common path of development.
Thus, there are three main strategies to combat piracy, aimed at reducing the cases in which the above inequality holds.
At one time, American economist Gary Stanley Becker (eng. Gary Stanley Becker), winner of the Swedish State Bank's prize in economics in memory of Alfred Nobel, better known by the common people as the Nobel Prize in economics, and just a smart man, suggested the following formula to describe such processes:
EY = p * U (y - F) + (1 - p) * U (y)
Where EY is the total expected benefit of a crime by an individual,
y is the net potential benefit of a crime
U () is the utility function of the crime,
F - the value of punishment.
Of course, common sense and his friend Captain Obviousness suggest that in a good way the value of U (y - F) should be less than zero, that is, the penalty should override the benefits of using an unlicensed product. Otherwise, the punishment system is completely ineffective, because then the value of EY will always be positive.
In general, economists usually use utility (lat. Utilitas) to measure the benefits in special conditional units called utils (hence, utilitarianism, that is, a concept that evaluates any act in terms of its usefulness to the subject) . In Russian, it is traditionally called “util”, since not the most sublime connotations are historically associated with the word “junk” by the Soviet people. However, in the following, we sacrifice scientific accuracy for the sake of simplification, and equate utili to monetary units, although from the point of view of economic theory this is, to put it mildly, a great liberty.
The utility function is a special economic model that formally describes the dependence of the utility received by an individual and the factors used for this.
For example, the utility function of a liter of beer might look like
U (y) = 3y - y 2
This means that after one liter of beer, we will get benefits for 2 utils, after two - also for 2, after three - for 0, that is, there is no special meaning in their use (this is what is called “you need to know your standard” ), well, and in four liters or more, the utility is already negative, that is, we will get worse and worse from such quantities of beer.
Now, when the basic concepts with a sin in half are entered, let us analyze the real example on the topic of the article.
The company uses unlicensed software that costs $ 1,000. The penalty for using pirated software is $ 5,000. The probability of detection of this software during the inspection and, accordingly, of a fine statement is 0.1. Well, let's take the simplest utility functions: U (y) = y and U (y - F) = y - F, although in reality there are practically no such functions, but now we are talking about the method as such, therefore some schematics are forgivable.
With the number 5000, everything is clear - this is punishment, 0.1 is the probability of being caught, and 1000 is the utility of a crime, because using pirated software, we save on its licensing cost.
That is, the total expected benefit from using one copy of unlicensed software in this company is calculated as
0.1 * (1000 - 5000) + (1 - 0.1) * 1000 = 500
Thus, despite the penalty in the fivefold amount and the ten percent probability of verification, it is still beneficial for the company to use pirated software.
By the way, cunning managers can take this method to calculate the acceptability of the risks of using pirated software in their organization, if, of course, you manage to reduce all real factors to this model.
Now back to the three strategies to combat piracy listed above and consider the implications of their use.
According to the first strategy, toughening the punishment, you should increase the variable F in the first term of the Becker formula, which describes the pirate's gain if he is caught. However, the second member, who determines the pirate's prize in the case of the avoidance of punishment, will not be affected by this change at all. That is, by tightening the punishment, we will be able to lower the overall benefit of the pirate only if he is identified.
According to the second strategy, increasing the efficiency of detecting pirates, one should increase the variable p, which will increase the first and decrease the second term. If U (y - F), that is, the net benefit of the pirate when caught, will indeed be negative, then by increasing the likelihood of punishment we will be able to influence both scenarios: to identify or not to identify an unlicensed consumer of the product.
Moreover, even if U (y - F) is still greater than zero, empirical observations show that the second term in reality decreases faster than the first increases, that is, the overall efficiency will still increase.
Well, the third strategy, reducing the potential benefits of using an unlicensed product, involves reducing the value of y, which will also affect both members of the Becker formula, moreover, even if U (y - F) is greater than zero. This can be achieved both by lowering the prices for purchasing a licensed product (including simply by reducing the time lost on this acquisition), and by the availability of more affordable alternatives.
Of course, the alternative may be less profitable, but this can be taken into account in the calculations by changing its utility function. For example, if the functionality (which we equate to the utility here) of an alternative freeware product is less by 30%, then it will be necessary to compare the total expected utility of the pirated and freeware variants, calculated using the formulas
Ey 1 = p * U (y - F) + (1 - p) * U (y)
and
Ey 2 = U (y - 0.3)
Summing up, it can be noted that in reality, of course, all three factors are subject to change, causing the overall expected benefit from the use of pirated products, but still there is often a general bias in one direction, which is usually toughened punishment. Of course, there is a certain logic in this, but as shown above, this is far from the only solution, and often not the most effective one, which probably many people can see for themselves by analyzing their own attitude to the use of pirated products.
In this article, the problem of piracy will be considered from the position of utilitarianism, which will allow you to demonstrate, if not the complete inconsistency of the most popular concept, then at least its ambiguity. The material was written for the general public, therefore, from the point of view of strict economic theory has a number of significant simplifications and inaccuracies. For this reason, people versed in the methodology of microeconomic analysis to read this text is not recommended in order to avoid fair resentment.
Immediately it should be noted that in the future we will proceed from the existing legal norms, that is, abstract arguments about the injustice of the modern copyright system will be left outside the scope of this article. Of course, there are quite interesting arguments in favor of the need to revise the entire system, but naively hopes that the authorities of most countries are ready to accept such radical ideas today or tomorrow.
First of all, let us take as an axiom that piracy is an absolutely rational activity, and not some marginal behavior of all participants in this process. Of course, there are certainly a number of people participating in this for some irrational reasons, but this is an absolute minority. In the end, despite the existence of kleptomania, theft is interpreted in society quite clearly.
Now we will identify the main reason for the commission of any illegal act, including piracy.
In most cases, each individual has well-defined information about the benefits he will receive from committing a wrongful act, about the approximate punishment that is due to him in the event of a capture, and about the approximate probability of this capture. This knowledge may not necessarily be in the form of specific numbers, but an intuitive understanding of these categories and their relative values, as a rule, is present in all members of society.
Denoting these three quantities as Y, p, and F, we can get the following inequality:
Y> p * F
This inequality is a prerequisite for committing a deliberate crime. That is, in simple words, a crime occurs only when the potential benefit of committing it exceeds the risk of potential punishment.
It may seem to some that everything is too simplified and in reality there are far fewer crimes than cases of compliance with this condition.
In this case, let Y = l - m, where l - these are specific material benefits, and m - the moral agony of committing a crime. That is, in some cases, Y is simply negative due to the moral considerations of the individual, which makes the offense unprofitable from the very beginning.
When it comes to piracy, it is quite possible to say that the value of p, that is, the likelihood of punishment, is quite small, at least it was at the dawn of the development of this market, and it remains so in many countries until today.
Thus, due to the fact that the risk of being punished for the distribution and use of an unlicensed product, as a rule, is extremely small, the above condition is observed almost always, which causes such a prevalence of offenses in this area.
Of course, few people argue on this topic, imagining various formulas, but an intuitive understanding of this is inherent in almost all members of society. That is why the most obvious answer to the question “How to fight against piracy” is “It is necessary to punish the pirates more strictly”.
That is, returning to the mathematical description, if we increase F, the right side of the inequality will increase and the condition will be met in fewer cases. Of course, the logic is correct, but do not forget about other values.
Just because the answer about toughening punishment for the majority is the most obvious, it is this anti-piracy strategy that has become a priority in modern society, especially thanks to those who, frankly, can hardly claim to be an expert in these matters, although by the will of fate, has a certain influence on the choice of a common path of development.
Thus, there are three main strategies to combat piracy, aimed at reducing the cases in which the above inequality holds.
- An increase in the F value, which implies a harsher punishment applied to captured pirates.
- Increasing the value of p, which implies an increase in the probability of catching pirates by improving the mechanisms for identifying such offenses.
- A decrease in the Y value, which implies a reduction in the potential benefits of piracy by providing available legal alternative ways of obtaining a product.
At one time, American economist Gary Stanley Becker (eng. Gary Stanley Becker), winner of the Swedish State Bank's prize in economics in memory of Alfred Nobel, better known by the common people as the Nobel Prize in economics, and just a smart man, suggested the following formula to describe such processes:
EY = p * U (y - F) + (1 - p) * U (y)
Where EY is the total expected benefit of a crime by an individual,
y is the net potential benefit of a crime
U () is the utility function of the crime,
F - the value of punishment.
Of course, common sense and his friend Captain Obviousness suggest that in a good way the value of U (y - F) should be less than zero, that is, the penalty should override the benefits of using an unlicensed product. Otherwise, the punishment system is completely ineffective, because then the value of EY will always be positive.
In general, economists usually use utility (lat. Utilitas) to measure the benefits in special conditional units called utils (hence, utilitarianism, that is, a concept that evaluates any act in terms of its usefulness to the subject) . In Russian, it is traditionally called “util”, since not the most sublime connotations are historically associated with the word “junk” by the Soviet people. However, in the following, we sacrifice scientific accuracy for the sake of simplification, and equate utili to monetary units, although from the point of view of economic theory this is, to put it mildly, a great liberty.
The utility function is a special economic model that formally describes the dependence of the utility received by an individual and the factors used for this.
For example, the utility function of a liter of beer might look like
U (y) = 3y - y 2
This means that after one liter of beer, we will get benefits for 2 utils, after two - also for 2, after three - for 0, that is, there is no special meaning in their use (this is what is called “you need to know your standard” ), well, and in four liters or more, the utility is already negative, that is, we will get worse and worse from such quantities of beer.
Now, when the basic concepts with a sin in half are entered, let us analyze the real example on the topic of the article.
The company uses unlicensed software that costs $ 1,000. The penalty for using pirated software is $ 5,000. The probability of detection of this software during the inspection and, accordingly, of a fine statement is 0.1. Well, let's take the simplest utility functions: U (y) = y and U (y - F) = y - F, although in reality there are practically no such functions, but now we are talking about the method as such, therefore some schematics are forgivable.
With the number 5000, everything is clear - this is punishment, 0.1 is the probability of being caught, and 1000 is the utility of a crime, because using pirated software, we save on its licensing cost.
That is, the total expected benefit from using one copy of unlicensed software in this company is calculated as
0.1 * (1000 - 5000) + (1 - 0.1) * 1000 = 500
Thus, despite the penalty in the fivefold amount and the ten percent probability of verification, it is still beneficial for the company to use pirated software.
By the way, cunning managers can take this method to calculate the acceptability of the risks of using pirated software in their organization, if, of course, you manage to reduce all real factors to this model.
Now back to the three strategies to combat piracy listed above and consider the implications of their use.
According to the first strategy, toughening the punishment, you should increase the variable F in the first term of the Becker formula, which describes the pirate's gain if he is caught. However, the second member, who determines the pirate's prize in the case of the avoidance of punishment, will not be affected by this change at all. That is, by tightening the punishment, we will be able to lower the overall benefit of the pirate only if he is identified.
According to the second strategy, increasing the efficiency of detecting pirates, one should increase the variable p, which will increase the first and decrease the second term. If U (y - F), that is, the net benefit of the pirate when caught, will indeed be negative, then by increasing the likelihood of punishment we will be able to influence both scenarios: to identify or not to identify an unlicensed consumer of the product.
Moreover, even if U (y - F) is still greater than zero, empirical observations show that the second term in reality decreases faster than the first increases, that is, the overall efficiency will still increase.
Well, the third strategy, reducing the potential benefits of using an unlicensed product, involves reducing the value of y, which will also affect both members of the Becker formula, moreover, even if U (y - F) is greater than zero. This can be achieved both by lowering the prices for purchasing a licensed product (including simply by reducing the time lost on this acquisition), and by the availability of more affordable alternatives.
Of course, the alternative may be less profitable, but this can be taken into account in the calculations by changing its utility function. For example, if the functionality (which we equate to the utility here) of an alternative freeware product is less by 30%, then it will be necessary to compare the total expected utility of the pirated and freeware variants, calculated using the formulas
Ey 1 = p * U (y - F) + (1 - p) * U (y)
and
Ey 2 = U (y - 0.3)
Summing up, it can be noted that in reality, of course, all three factors are subject to change, causing the overall expected benefit from the use of pirated products, but still there is often a general bias in one direction, which is usually toughened punishment. Of course, there is a certain logic in this, but as shown above, this is far from the only solution, and often not the most effective one, which probably many people can see for themselves by analyzing their own attitude to the use of pirated products.
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Source: https://habr.com/ru/post/150465/
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