How should you respond to the news of an employee's kidnapping?
Most kidnappings take place in countries where governments are weak and territory is disputed. Without a police force able to help, you will need to negotiate to get your loved one or employee back. So, what is the "right" price for his or her life?
One expert analyzed the problem using the tools of economics and examined it from the perspective of all parties. The kidnappers want to extract the maximum amount of profit, yet do not want to be caught. Often, their first demand is unreasonable, but they are really trying to determine how much the victim is really worth. Depending on how the victim's representatives respond, the kidnappers will either revise the ransom upwards or downwards. If they are offered a large amount, say a million dollars, straightaway, the kidnappers will believe there is a lot more they can extract.
Therefore, the best response to a ransom demand is to never agree immediately to a kidnapper's demands, according to the expert. If the kidnappers have time, they will keep doubling the price and judge the response to this accordingly. If the kidnappers agree to the first ransom offer they are given, they are probably negotiating from the back of a car, and are desperate to return the hostage in exchange for a quick payoff.
By contrast, a swiftly agreed, overgenerous ransom puts a bulls-eye target on your wider family, your firm's other employees (if you are travelling with work), and fellow nationals. News of easy profits spread quickly in criminal communities and can cause local or regional kidnapping booms.
Getting the right price requires haggling out a compromise that both satisfies the kidnappers and is affordable for the victims' representatives. Economic reasoning tells us where this undignified bartering ends: kidnappers will release their victim when the cost of holding on to the hostage exceeds what they expect to gain from the next round of ransom negotiations.
When foreigners are abducted in a kidnap-prone area, there is often a need for a professional ransom negotiator. For kidnap insurers, it is of paramount importance that hostage markets develop norms of non-violence and ways of negotiating ransoms that facilitate swift and reliable releases - while at the same time ensuring that kidnapping is not an easy way to riches. "Inside the ransom business" www.dhakatribune.com (Feb. 20, 2019).