Pirates of the Mediterranean: An Empirical Investigation of Bargaining with Transaction Costs
AbstractThis paper uses ransom prices and time to ransom for over 10,000 captives rescued from two Barbary strongholds to investigate the empirical relevance of dynamic bargaining models with one-sided asymmetric information in ransoming settings. We observe both multiple negotiations that were ex ante similar from the uninformed party’s (seller’s) point of view, and information that only the buyer knew. Through reduced form analysis, we test some common qualitative predictions of dynamic bargaining models. We also structurally estimate the model in Cramton (1991), to compare negotiations in different Barbary strongholds. Our estimates suggest that the historical bargaining institutions were remarkably efficient, despite the presence of substantial asymmetric information.
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Bibliographic InfoPaper provided by Duke University, Department of Economics in its series Working Papers with number 11-24.
Date of creation: 2011
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- Tim Besley & Thiemo Fetzer & Hannes Mueller, 2012.
"One Kind of Lawlessness: Estimating the Welfare Cost of Somali Piracy,"
626, Barcelona Graduate School of Economics.
- Tim Besley & Thiemo Fetzer & Hannes Mueller, 2012. "One Kind of Lawlessness: Estimating the Welfare Cost of Somali Piracy," UFAE and IAE Working Papers 898.12, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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