A Simple Hostage Model of Identity
14 Pages Posted: 30 Apr 2020
Date Written: April 6, 2020
This paper outlines a simple hostage model of identity, where the hostage is itself an information asset put at risk of exploitation. These information assets—identity attributes of the posting party—are either executed or revealed to the wider world in the event of ex-post opportunism. Credible commitments, of which hostages are one sort, constrain behaviour by making it more profitable for trading partners to follow through on their promises rather than renege. Identity attributes described in this model are used in n-sided interactions to price goods and services, as well as impose sanctions.
Keywords: credible commitment, hostage, new institutional economics, economics of identity, private ordering
JEL Classification: D80, D86
Suggested Citation: Suggested Citation