Inventors and pirates: creative activity and intellectual property rights

This paper focuses on the choices that link the security of intellectual property rights to the environment for pirating ideas, which includes the legal system, and to the interpersonal distribution of talent. These choices include the decisions made by potentially creative people either to engage in creative activity or to be pirates of the ideas created by others and the decisions made by people who are engaged in creative activity to allocate time and effort to guarding the ideas that they create from pirating. Among other results, the analysis shows that, holding fixed the average level of talent, the existence of geniuses, who are much more talented than ordinary potentially creative people, can cause a larger fraction of potentially creative people to choose to be pirates, thereby making intellectual property rights less secure, but also can result in a larger value of ideas being created. The analysis also shows that intellectual property rights probably are too secure, in that the amount of time and effort allocated to guarding ideas from pirating probably is larger than the amount that would maximize the value of ideas created.