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It's quite simple: Piggy hates being on the outside of the group of boys, and he knows fine well that he is liable to be mocked. Here's his reaction when Ralph corrects Jack's "Fatty" to "Piggy":
For the moment the boys were a closed circuit of sympathy with Piggy outside: he went very pink, bowed his head and cleaned his glasses again.
Of course, the other reason Piggy doesn't stand up to Jack is stated just before Jack tells him to shut up: Piggy immediately senses Jack's charisma and strong, forceful presence:
Piggy asked no names. He was intimidated by this uniformed superiority and the offhand authority in Merridew's voice. He shrank to the other side of Ralph and busied himself with his glasses.
I don't think Piggy feels there is much of a choice. With Ralph, the more democratic character, Piggy feels he can at least ask to not be called nicknames, but he doesn't attempt this with Jack. It could be Golding's immediate establishment of Jack as the anarchist, also the more evil-minded of the two (Jack and Ralph).
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