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Pirates of the Mediterranean: An empirical investigation of bargaining with asymmetric information

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  • Attila Ambrus
  • Eric Chaney
  • Igor Salitskiy

Abstract

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.

Suggested Citation

  • Attila Ambrus & Eric Chaney & Igor Salitskiy, 2018. "Pirates of the Mediterranean: An empirical investigation of bargaining with asymmetric information," Quantitative Economics, Econometric Society, vol. 9(1), pages 217-246, March.
    • Handle: RePEc:wly:quante:v:9:y:2018:i:1:p:217-246
    DOI: 10.3982/QE655
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    References listed on IDEAS

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    1. Peter T. Leeson, 2007. "An-arrgh-chy: The Law and Economics of Pirate Organization," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 1049-1094, December.
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    Cited by:

    1. Olivier Bochet & Manshu Khanna & Simon Siegenthaler, 2024. "Beyond Dividing the Pie: Multi-Issue Bargaining in the Laboratory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(1), pages 163-191.
    2. Dindaroglu, Burak & Ertac, Seda, 2024. "An empirical study of sequential offer bargaining during the Festival of Sacrifice," Journal of Economic Psychology, Elsevier, vol. 101(C).
    3. Preyas Desai & Pranav Jindal, 2024. "Getting a Break in Bargaining: An Upside of Time Delays," Marketing Science, INFORMS, vol. 43(6), pages 1260-1278, November.

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