Kidnap Insurance and its Impact on Kidnapping Outcomes
In the developing world, kidnapping is relatively common, and a market for kidnap insurance has arisen in response. We provide a model that allows us to analyze how kidnap insurance affects the interaction between the kidnapper and the victim’s family when both are self-interested and have complete knowledge. We find that a market for kidnap insurance can be supported because it benefits a risk averse family, as long as the introduction of insurance does not increase the risk of kidnapping too much. Families should fully insure if purchasing insurance does not increase the probability of kidnapping, and partially insure otherwise. Kidnapping insurance allows families to redeem hostages from kidnappers who are more willing to kill, which reduces the number of kidnapping fatalities as long as the insurance does not increase the risk of kidnapping too much.
|Date of creation:||Mar 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Mail Stop 030, Reno, NV 89557-0207|
Phone: (775) 784-6450
Fax: (775) 784-4728
Web page: http://www.business.unr.edu/econ/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Catherine Rodriguez & Edgar Villa, 2012. "Kidnap risks and migration: evidence from Colombia," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(3), pages 1139-1164, July.
- Rony Pshisva & Gustavo A. Suarez, 2006. "'Captive markets': the impact of kidnappings on corporate investment in Colombia," Finance and Economics Discussion Series 2006-18, Board of Governors of the Federal Reserve System (U.S.).
- M. Vannini & B. McCannon & C. Detotto, 2012. "Understanding Ransom Kidnapping and Its Duration," Working Paper CRENoS 201219, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
- Bertrand Crettez & Régis Deloche, 2009. "A cliometric analysis of the Aldo Moro kidnapping and assassination," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 3(2), pages 123-139, June.
- Lapan, Harvey E & Sandler, Todd, 1988.
"To Bargain or Not to Bargain: That Is the Question,"
American Economic Review,
American Economic Association, vol. 78(2), pages 16-21, May.
- Lapan, Harvey E. & Sandler, Todd, 1988. "To Bargain or Not to Bargain: That is the Question," Staff General Research Papers 10817, Iowa State University, Department of Economics.
- Atkinson, Scott E & Sandler, Todd & Tschirhart, John, 1987. "Terrorism in a Bargaining Framework," Journal of Law and Economics, University of Chicago Press, vol. 30(1), pages 1-21, April.
When requesting a correction, please mention this item's handle: RePEc:unr:wpaper:13-001. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mehmet Tosun)
If references are entirely missing, you can add them using this form.