Thursday, January 8, 2009

On Ransom

During my travels, I have encountered several individuals and groups who take more active measures in acquiring wealth. Sometimes these people engage in what it's commonly known as ransoming: Capturing something valuable and demanding compensation for returning it. The valuable can be an item, an individual, a group of people or even a ship. Still, the decision-making process for all of these cases is the same.
So how would a reasonable businessman approach such a situation?
The first step is to identify all possible outcomes and the losses and gains associated with them.
  1. The valuables are retrieved without paying the ransom. The victim loses nothing, and the ransomer gains nothing.
  2. Ransom is paid, and the valuables are returned. The victim loses the ransom amount, and the ransomer gains it.
  3. The ransom is not paid, and the valuables are not returned. The victim loses the valuables, and the ransomer gains them.
  4. The ransom is paid, but the valuables are not returned. The victim loses everything, and the ransomer gains everything.
#1 is naturally the best option, but usually requires some form of leverage, like overwhelming force or credible promises of future revenue for the ransomer. But in contemporary Empire markets where profit margins are already slim, spreading the wealth around is not always an option. So in most cases, we will be dealing with #2, #3 and #4. It's noteworthy to realize that the decision-making process is two-tiered: The victim either chooses #3 or lets the ransomer choose between #2 and #4. This limited form of choice sometimes affects the victim psychologically and provides a powerful incentive to choose #3, if only to spite the ransomer. In many cases, this is counterproductive and such decision can carry a hefty cost.

A smarter businessman will take the time between capture and the deadline to perform research on his adversary, because understanding your opponent's motivations will provide clues on whether the opponent is more likely to choose #2 or #4. Many ransomers are independent. Such entities' primary forms of income are ransoming, non-aggression pacts and sometimes protection agreements. When it comes to ransoming ships, they will most likely have scouts in space and have researched you to evaluate your willingness and means to pay a ransom. If you are dealing with such individuals or groups, they are likely to choose #2. Their intention is not to stop a revenue stream, only to divert it to their own accounts. Their ultimate goal would be the non-aggression pact, where they are paid for not engaging certain targets, providing a steady stream of revenue for minimal operating costs. As such, any measures that provide a strong incentive for targets to refrain from risky behavior is counterproductive at best. Choosing #4 would make their next target more likely to choose #3 as their reputation spreads, cutting off their source of income altogether. 

However, there are also entities who engage in ransoming to drive their victims out of business. The more damage caused to the target, the better. A mercenary corporation hired by a competitor is a good example. Their contract probably has a one-time payment for a certain time period of activity, and any and all gains from such activity can be kept by the mercenary corporation. Thus they have a strong incentive to choose #4 as often as possible. A smart businessman should always choose #3 if dealing with said entities to minimize losses. Mercenary contracts are not cheap, and minimizing your losses is an important part of an overall strategy if a war of attrition is unavoidable.

To recap: Choose #3 when dealing with competitors or their subcontractors. Let independents choose #2.

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