Hostage Posting as a Mechanism of Trust

Werner Raub
Additional contact information
Werner Raub: Utrecht University and the Interuniversity Center for Social Science Theory and Methodology (ICS), w.raub@fss.uu.nl

Rationality and Society, 2004, vol. 16, issue 3, 319-365

Abstract: We study voluntary hostage posting - pledging a bond - as a commitment mechanism promoting trust, including trust in economic exchange. A hostage can promote trust by binding the trustee through reducing his incentives for abusing trust, by providing compensation for the trustor in case trust is abused, and by serving as a signal for the trustor about unobservable characteristics of the trustee that are related to the trustee’s opportunities and incentives for abusing trust. We provide an integrated model that allows for a simultaneous analysis of how hostages promote trust through binding, compensation, and signaling. We model hostage posting as a mechanism of trust using a game with incomplete information and uncertainty. Our theorems provide conditions for equilibria such that a hostage is posted by the trustee and induces the trustor to place trust that is subsequently honored by the trustee. The article shows that equilibrium selection problems are not severe: the equilibria are unique or there are only few other equilibria with less appealing properties. Hence, the results can be used for predictions on trust based on hostage posting among rational actors.

Keywords: commitments; cooperation; game theory; hostages; trust (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/1043463104044682 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:ratsoc:v:16:y:2004:i:3:p:319-365

DOI: 10.1177/1043463104044682

Access Statistics for this article

More articles in Rationality and Society
Bibliographic data for series maintained by SAGE Publications ().