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Barrgh-gaining with Somali Pirates

Author

Listed:
  • 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.

Suggested Citation

  • Olaf J. de Groot & Matthew D. Rablen & Anja Shortland, 2012. "Barrgh-gaining with Somali Pirates," Economics of Security Working Paper Series 74, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diweos:diweos74
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.408689.de/diw_econsec0074.pdf
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    References listed on IDEAS

    as
    1. Khusrav Gaibulloev & Todd Sandler, 2009. "Hostage Taking: Determinants of Terrorist Logistical and Negotiation Success," Journal of Peace Research, Peace Research Institute Oslo, vol. 46(6), pages 739-756, November.
    2. Olaf J. de Groot & Matthew D. Rablen & Anja Shortland, 2011. "Gov-aargh-nance - "even criminals need law and order"," CEDI Discussion Paper Series 11-01, Centre for Economic Development and Institutions(CEDI), Brunel University.
    3. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, April.
    4. Bellavance, Franois & Dionne, Georges & Lebeau, Martin, 2009. "The value of a statistical life: A meta-analysis with a mixed effects regression model," Journal of Health Economics, Elsevier, vol. 28(2), pages 444-464, March.
    5. Timothy Besley & Thiemo Fetzer & Hannes Mueller, 2012. "One Kind of Lawlessness: Estimating the Welfare Cost of Somali Piracy," Working Papers 626, Barcelona Graduate School of Economics.
    6. Inmaculada Martínez-Zarzoso & Sami Bensassi, 2013. "The Price Of Modern Maritime Piracy," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(5), pages 397-418, October.
    7. MatthewD. Rablen, 2008. "Relativity, Rank and the Utility of Income," Economic Journal, Royal Economic Society, vol. 118(528), pages 801-821, April.
    8. repec:cup:apsrev:v:77:y:1983:i:01:p:36-54_24 is not listed on IDEAS
    9. Anja Shortland & Federico Varese, 2012. "The Business of Pirate Protection," Economics of Security Working Paper Series 75, DIW Berlin, German Institute for Economic Research.
    10. Peter T. Leeson, 2007. "An-arrgh-chy: The Law and Economics of Pirate Organization," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 1049-1094, December.
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    Cited by:

    1. Shortland Anja, 2015. "Can We Stop Talking about Somali Piracy Now? A Personal Review of Somali Piracy Studies," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 21(4), pages 419-431, December.
    2. Alfredo Burlando & Anca D. Cristea & Logan M. Lee, 2015. "The Trade Consequences of Maritime Insecurity: Evidence from Somali Piracy," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 525-557, August.
    3. Shortland Anja & Percy Sarah, 2013. "Governance, Naval Intervention and Piracy in Somalia," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 19(2), pages 275-283, August.
    4. Lewis, Justin S., 2016. "Maritime piracy confrontations across the globe: Can crew action shape the outcomes?," Marine Policy, Elsevier, vol. 64(C), pages 116-122.

    More about this item

    Keywords

    Piracy; ransom; duration; bargaining; law enforcement; Somalia;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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