| By: |
Olaf J. de Groot;
Matthew D. Rablen;
Anja Shortland |
| Abstract: |
Ransoms paid to Somali pirates are drifting upward and negotiation times are
increasing, yet there is huge variation in bargaining outcomes across
shipowners. We use a unique dataset of 179 Somali hijackings, and an
underlying theoretical model of the bargaining process based on detailed
interviews with ransom negotiators, to analyze the empirical determinants of
ransom amounts and negotiation lengths. We find that ransom amount and
negotiation length depend on the observable characteristics of both pirates
and ships and on the "reference ransom" established by previous ransom
payments for a specific ship type. International naval enforcement efforts
have driven up ransom amounts. We also observe a "hump-shape" in ransoms, with
relatively low ransoms being paid following both short and very long
negotiations, and the highest ransoms paid following intermediate length
negotiations. |
| Keywords: |
Piracy, ransom, duration, bargaining, law enforcement, Somalia |
| JEL: |
K42 P48 |
| Date: |
2012 |
| URL: |
http://d.repec.org/n?u=RePEc:diw:diweos:diweos74&r=law |