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Hostage Posting as a Mechanism of Trust

Author

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  • Werner Raub

    (Utrecht University and the Interuniversity Center for Social Science Theory and Methodology (ICS), w.raub@fss.uu.nl)

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.

Suggested Citation

  • Werner Raub, 2004. "Hostage Posting as a Mechanism of Trust," Rationality and Society, , vol. 16(3), pages 319-365, August.
    • Handle: RePEc:sae:ratsoc:v:16:y:2004:i:3:p:319-365
    DOI: 10.1177/1043463104044682
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    References listed on IDEAS

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    Cited by:

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    3. Przepiorka, Wojtek, 2022. "Testing sociological theories with digital trace data from online markets," SocArXiv ed2xc, Center for Open Science.
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    5. Fehrler, Sebastian & Przepiorka, Wojtek, 2016. "Choosing a partner for social exchange: Charitable giving as a signal of trustworthiness," Journal of Economic Behavior & Organization, Elsevier, vol. 129(C), pages 157-171.
    6. Kas, Judith, 2022. "The effect of online reputation systems on intergroup inequality," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 96, pages 1-1.
    7. Davide Barrera & Brent Simpson, 2012. "Much Ado About Deception," Sociological Methods & Research, , vol. 41(3), pages 383-413, August.
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