HOSTAGES AS A COMMITMENT DEVICE - A GAME-THEORETIC MODEL AND AN EMPIRICAL-TEST OF SOME SCENARIOS

Hostage posting is a mechanism of cooperation in social and economic r elations with incentive problems. A game-theoretic model of hostage po sting as a commitment device is presented. Cooperation via hostage pos ting is individually rational if it is supported by a subgame perfect equilibrium. Maximin properties of such equilibria are also considered . Predictions derived from the model were tested in several experiment s. Results support the empirical significance of subgame perfect equil ibria and of maximin-strategies. The institution of hostages is an anc ient technique that deserves to be studied by game theory, as does the practice of drinking wine from the same glass or of holding gang meet ings in places so public that neither side could escape if it subjecte d the other to massacre.'