Kidnap Insurance and its Impact on Kidnapping Outcomes

Alexander Fink () and Mark Pingle ()

ICER Working Papers from ICER - International Centre for Economic Research

Abstract: In the developing world, kidnapping is relatively common, and a market for kidnap insurance has arisen in response. We provide a model that allows us to analyze how kidnap insurance will affect the interaction between the kidnapper and the victim’s family when both are self-interested and have complete knowledge. We find that a market for kidnap insurance can be supported because it benefits a risk averse family, as long as the introduction of insurance does not increase the risk of kidnapping too much. Families should fully insure if purchasing insurance does not increase the probability of kidnapping, and partially insure otherwise. Kidnapping insurance allows families to redeem hostages from kidnappers who are more willing to kill, which will reduce the number of kidnapping fatalities as long as the insurance does not increase the risk of kidnapping too much.

JEL-codes: C72 G22 K4 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2012-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Kidnap insurance and its impact on kidnapping outcomes (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:icr:wpicer:13-2012

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