The Price of a Life

Kidnap ◽  
2019 ◽  
pp. 107-130
Author(s):  
Anja Shortland
Keyword(s):  
Social Benefits ◽  
Principal Agent ◽  
Cooperative Behaviour ◽  
Vicious Cycle ◽  
Trade Off ◽  
Hostage Negotiation ◽  
Principal Agent Problem ◽  
Costly Signals

Ransom discipline is paramount for kidnap insurance and provides wider social benefits. Outsize ransoms can trigger a vicious cycle of kidnappings, hostage abuse, and ransom inflation. Crisis responders have developed a robust bargaining protocol to stabilize ransoms and incentivize cooperative behaviour by kidnappers. Kidnappers only release hostages when they think they have extracted the maximum available ransom. This requires that hostage stakeholders send psychologically costly signals to convince kidnappers that their funds are exhausted. However, if hostage stakeholders believe that there is a trade-off between time and money in a hostage negotiation, the bargaining protocol creates the (false) impression of a principal–agent problem between professional negotiators and stakeholders. Managing the resulting suspicion and distrust is as important as shaping the negotiation with the kidnappers.

scholarly journals Incentivizing by example and money

2020 ◽  
Author(s):  
Thomas Bauer ◽  
Franz Wirl
Keyword(s):  
Private Information ◽  
Financial Incentives ◽  
Role Models ◽  
Principal Agent ◽  
Principal Agent Problem ◽  
Reservation Utility

AbstractLeaders are role models that affect their employees’ efforts. The effect depends on how much an employee identifies with the “boss”. Since this degree of identification is private information of the employee, additional financial incentives must be provided. Therefore, we study a principal-agent problem in which the principal affects the agent’s effort by her own effort and by financial incentives. The resulting principal-agent problem has a few non-standard specifics such as: (i) bilateral externalities as the principal’s effort affects the agent and vice versa and (ii) endogenous reservation utility of the agent. Combined, this leads to non-trivial and interesting contracts.

scholarly journals Contribution of worker participation to increase the efficiency of firms

2004 ◽  
Vol 35 (3) ◽  
pp. 23-29
Author(s):  
P. De Villiers ◽  
G. Kooy
Keyword(s):  
South Africa ◽  
Asymmetric Information ◽  
Principal Agent ◽  
Worker Participation ◽  
Principal Agent Problem ◽  
Conditions Of Employment ◽  
Increase Efficiency

There are many factors that may lead to inefficiencies in a firm. One reason is the existence of a principal-agent problem. Linked with this problem is asymmetric information, unaligned motives of principals and agents, distrust (that was rampant in the era of apartheid in South Africa, but more recently the Basic Conditions of Employment Act can fulfil this role) and conflict. Worker participation schemes can help to alleviate this problem and different forms of worker participation schemes are discussed that can increase efficiency of firms.

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