Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

Copyright Day, Enforcement , and Demising Returns

 

April 23 is celebrated as the World Book and Copyright Day. It marks the commemoration of the birthday of William Shakespeare. It is moot whether the Bard of Avon was born on this day, but nevertheless, there is a celebration and this is associated with the books and the ideas behind those expressions in the books. Books are expression of an idea that is sought to be conveyed by the author. The idea needs protection since anyone else can steal the idea. Yet ideas can arise independently to many of them. The way they might express would be different. For instance if someone were to express an idea through a book, somebody might convey the same idea through a movie or they might be a musical composition seeking to project the same idea. A story might be told to the audience, yet when asked to write down the story or orally retell the story, each member of the audience might convey in different style and form. Therefore, while the underlying might be the same, the way in it is expressed would be different. Hence the protection would have to be given to the method of expression or the expression itself rather than the underlying idea or thoughts being conveyed through the expression. Towards this, the idea of copyright came into existence around 300 years or so ago. Since it was about the printing revolution at that moment, it was all about books and other publications that were protected by copyright. With passage of time, the protection got extended to numerous other creative works.

 

Copyright as mentioned applies to works of creativity. Yet the question arises on the time period of copyright. For instance, the Bard might have composed his plays five hundred years ago, should his works continue to be protected or should they be open for anyone to publish. This set off the idea of having a limit on copyright period. This again with passage of time has got extended. The copyright term is usually the life of the author plus certain number of years varying in different jurisdictions from 50 to 99 years. The rationale is apparently simple. If copyrights were to cease in a short period of time, the original publishers might not have enough incentive to create works of art and knowledge. If the period was long, there would be a possibility of tragedy of anti-commons. Furthermore, there is a possibility that the author might get killed if the copyrights were to expire on his or her death. So therefore there is an additional protection.

 

The principle behind copyright protection was noble and something essential. Yet like other protections, there exists a prospect of infinite ever greening of works of art. For instance, Disney creations like Mickey Mouse continue to be stars or cash cows (to borrow from BCG parlance) for their owners and hence have every incentive to keep extending the term of copyright. Yet, while this might be true in one or two cases (usually superhits), it deprives the prospective creative adaptations for many others. In fact, creativity is something not a preserve of an individual or a firm and it is the society that would unleash its creative potential. In presence of copyright enforcement, it would be next to impossible to build works of derivative art, something essential in creative evolution of human mankind. Thus there is a potential for diminishing returns of copyright protection in terms of time limit.

 

It would have alright for the protection to be extended but the manner in which the industry especially music cracked down on silliest of the alleged infringements that caused perhaps a PR disaster. The concept of fair use was virtually jettisoned. There were enough instances to wonder whether celebrities could be threatened in terms of their livelihood by young kids performing them and posting them on YouTube. The point is not that the music industry would crack down on copyright but the remedies for the fightback by the common man were prohibitive and beyond reach. The courts would perhaps rule against the companies but very few had the resources to take the battle all the way to the highest court in the land. Google might have won cases in the context of both Google Books and the recent one with Oracle but both instances, they had virtually infinite resources to mount or contest the legal battles. This is something not available to an ordinary man.

 

Piracy doesn’t evolve in a vacuum. It has a context to the same. It is essentially wherein a large market is deprived of the goods that someone decides to tap that market irrespective of the rules permitting the same or not. There is a perennial rebel waiting to tap the latent demand which would not be met by the mainstream. This pirate is what would eventually gain traction and threaten the revenues of the mainstream in some ways. In fact, to the mainstream, the pirate market might be uninteresting but would not allow others to tap in the same. The concept of price discrimination would still apply only to the top of the market or rather skimming the same in contrast to meeting the shortfall in latent demand. In fact, piracy has to be decriminalized. Piracy is not a crime per se. furthermore, there is a need to expand the concept of fair use. Derivative reworkings must be encouraged. In absence of derivatives, there would be loss in creative evolution of humanity. The ardent advocates of copyright maximalism themselves came out of the pirate roots or seeking refuge in derivative arts. Hollywood was a rebel in itself. Disney would not have gained success without derivate arts. Yet in their later years, they sought to protect revenues by erecting barriers of entry.

 

Copyright as it exists in the present form is a barrier of entry. It is barrier in fostering and nurturing creativity. It is a barrier in breaching new markets deprived of goods on the grounds of unaffordable prices. It is a barrier to prevent others from encroaching their market space. The expansion of copyright into numerous activities like coding illustrate the eagerness on the copyright holder’s part to protect themselves while seeking to build some revenues. The latter would be true in relation to the numerous of intellectual property trolls that have emerged on the horizon. Therefore there is a need to reframe the copyright legislation in the digital era. Else the copyright maximalists of the present day would soon be victims of Schumpeterian forces of creative destruction.

 

 

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