Indirect Reciprocity in Online Social Networks - A Longitudinal Analysis of Individual Contributions and Peer Enforcement in a Peer-to-Peer Music Sharing Network

Abstract:     
Indirect reciprocity is an important factor that motivates individual contributions in social networks. However, prior studies of indirect reciprocity are often limited to a snapshot view of individual interactions in social environments. This paper analyzes indirect reciprocity from a dynamic perspective in the context of a peer-to-peer music sharing network. We have two main findings. First, we reveal that indirect reciprocity is a dynamic social force. An individual's likelihood of contribution changes with the social environment, particularly with others' contribution levels in the network. The individual increases her contribution probability when she observes an increase in the number of contributors while decreases her contribution probability when she observes an increase in the number of free riders. Second, we find that indirect reciprocity is a social norm that is voluntarily enforced by contributors in the network. They do so through the setting of servers to discriminate downloaders. When the number of free riders increases, a contributor is more likely to change the server settings to provide preferential services to other contributors and lesser services to free riders. Our results indicate that indirect reciprocity plays a key role in sustaining private contributions to social networks.

Keywords: indirect reciprocity, social norm, social enforcement, social networks, peer-to-peer networks, public goods, incentive provisions, music sharing

JEL Classifications: C91, C92, D71, H41

Working Paper Series