Open AccessPirates of the Mediterranean: An empirical investigation of bargaining with asymmetric information
Author(s) -
Ambrus Attila,
Chaney Eric,
Salitskiy Igor
Publication year - 2018
Publication title -
quantitative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.062
H-Index - 27
eISSN - 1759-7331
pISSN - 1759-7323
DOI - 10.3982/qe655
Subject(s) - negotiation , ransom , context (archaeology) , payment , economics , value (mathematics) , set (abstract data type) , wage bargaining , microeconomics , econometrics , wage , labour economics , computer science , statistics , mathematics , geography , political science , finance , archaeology , law , programming language
We investigate the effect of delay on prices in bargaining situations using a data set containing thousands of captives ransomed from Barbary pirates between 1575 and 1692. Plausibly exogenous variation in the delay in ransoming provides evidence that negotiating delays decreased the size of ransom payments, and that much of the effect stems from the signalling value of strategic delay, in accordance with theoretical predictions. We also structurally estimate a version of the screening type bargaining model, adjusted to our context, and find that the model fits both the observed prices and acceptance probabilities well.