Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/119400 
Year of Publication: 
2012
Series/Report no.: 
Economics of Security Working Paper No. 74
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
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.
Subjects: 
Piracy
ransom
duration
bargaining
law enforcement
Somalia
JEL: 
K42
P48
Document Type: 
Working Paper

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