Incentive schemes in Peer-to-Peer (P2P) networks are necessary to discourage free-riding. One example is the Tit-for-Tat (TFT) incentive scheme, a variant of which is used in BitTorrent to encourage peers to upload. TFT uses data from local observations making it suitable for systems with direct reciprocity. This paper presents CompactPSH, an incentive scheme that works with direct and indirect reciprocity. CompactPSH allows peers to establish indirect reciprocity by finding intermediate peers, thus enabling trade with more peers and capitalizing on more resources. CompactPSH finds transitive paths while keeping the overhead of additional messages low. In a P2P file-sharing scenario based on input data from a large BitTorrent tracker, CompactPSH was found to exploit more reciprocity than TFT which enabled more chunks to be downloaded. As a consequence, peers are allowed to be stricter to fight white-washing without compromising performance.
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