Rationality, Markets and Morals

Studies at the Intersection of Philosophy and Economics

Rationality, Markets, and Morals: RMM 0 (2009), 207 – 225

Commitments by Hostage Posting

Abstract

We sur­vey rese­arch on incur­ring com­mit­ments by vol­un­t­a­ry hos­ta­ge pos­ting as a mecha­nism of coope­ra­ti­on. The Trust Game is employ­ed as a para­dig­ma­tic exam­p­le of coope­ra­ti­on pro­blems. We sketch a very simp­le game-theo­re­tic model that shows how vol­un­t­a­ry hos­ta­ge pos­ting can bind the trus­tee and thus indu­ce trustful­ness of the trus­tor as well as trust­wort­hi­ness of the trus­tee. We then indi­ca­te how the model can be impro­ved by inclu­ding uncer­tain­ty and incom­ple­te infor­ma­ti­on, tran­sac­tion cos­ts of hos­ta­ge pos­ting and com­pen­sa­ting effects as well as signal­ing effects of hos­ta­ges. Fur­ther exten­si­ons of the theo­re­ti­cal ana­ly­sis are out­lined as well as test­a­ble hypo­the­ses and refe­ren­ces to empi­ri­cal rese­arch. Pro­blems for future rese­arch are suggested.

Journal Information

RMM is an interdisciplinary publication focusing on issues of rationality, market mechanisms, and the experimental method of reasoning into moral subjects. It provides a forum for dialogue between philosophy, economics, and related disciplines, encouraging critical reflection on the foundations and implications of economic processes.