Hostage Negotiations as Zero Sum Games with Negative Expected Value

A public choice analysis with case studies from Israel and India

In December 1999, an Indian Airlines flight from Kathmandu (Nepal) to Delhi was hijacked. The hijackers held 191 passengers and crew hostage for a week, flying the plane to different locations in South and Central Asia before landing in what they considered friendly territory - Kandahar, Afghanistan.

The Indian government, led by Mr. Vajpayee, failed to send personnel to storm the plane when it briefly landed at Amritsar airport in India. At a subsequent stop in Dubai, the terrorists rolled a dead body off the ramp, presumably to demonstrate to the Indian government that they meant business. Under pressure, the government caved and released three terrorists from an Indian prison, all of whom were serving sentences for abducting westerners from the Kashmir valley.

One of those men, Masood Azhar, returned to Pakistan and founded Jaish-e-Mohammed (JeM), a prolific terrorist organization which would go on to launch attacks on the Indian parliament in 2001, an airforce base and consulate in 2016, and a suicide attack in 2019 that killed over 40 Indian personnel. Another released man, Omer Sheikh, would later be arrested for the abduction of WSJ reporter Daniel Pearl, whose execution was horrifically broadcast to the whole world.

The casualty count from all JeM terrorist attacks thus far is 431. Even assuming JeM ceases to exist tomorrow, it would seem that saving the lives of the 191 hostages on that flight, while understandable, was simply not worth it. Worse still, two of those three men continue to live freely in Pakistan, running an organization of 1,000-2,000 fighters and a network of Madrassas that churn out freshly baked Mujahideen by the year. In summary, a bad fucking trade that can only get worse.

We must recognize how hostage negotiations fundamentally differ from other types of negotiations. Typically, parties negotiate to find win-win solutions. It might often involve each party making sacrifices, sometimes even on important dimensions, but only because the outcome makes everyone better off. Can hostage negotiations or any negotiation with terrorists take this form?

The objective function of terrorists

The clue is in the word "terrorism". If terrorists could achieve their aims through negotiations, they would. Even the most murderous and ideological of them are somewhat instrumentally rational. If they are carrying out operations against a democratic state, you can safely assume their end goals are fundamentally at odds with the interests of the population at large. The contest between us and terrorists is typically a zero-sum one.

It’s worth clarifying this point about instrumental rationality. The vast majority of terrorist attacks are carried out by Islamists. The belief in martyrdom and paradise makes standard game theoretic analysis tricky since terrorists seem to display little to no self-preservation, which we consider the bedrock of rational self- interest. But we shouldn’t then be tempted to conclude that Jihadis don’t value their lives, because they seem willing to blow themselves up or fly planes into buildings for reasons that seem absurd to us.

The Jihadist is not exempt from the universal instinct for self-preservation. But these biological instincts are contextualized within a powerful ideology as just another base impulse that can be overriden - just like hunger or lust - and one that pales in comparison to the cosmic significance of the mission at hand. Yahya Sinwar is not ambivalent between his own life and death. Osama Bin Laden certainly was not. Their actions aren’t compatible with a desire for death per se, nor are they compatible with valuing human life intrinsically. Whether you believe them or not, they have convinced themselves that their lives, while insignificant in the cosmic scheme of things, are worth protecting, because they are instrumental as individuals, in waging the holy war effectively.

The stakes may be cosmic but the ends are political - reclaiming Muslim lands or moving forward to bring more and more territory within Islamic control. But that doesn’t mean political compromises with Jihadists are possible. As a citizen of a liberal democracy or as a Muslim who does not wish to live under a caliphate, there are unlikely to be many exchanges you can make with these people that will move them closer to their goal and not leave you worse off. 

Do hostages change this calculus?

Terrorists know all of this, which is why they engineer situations in which you seem to benefit from giving them what they want. They create an illusion of temporary alignment of incentives by positioning themselves to impose a cost on you. If you want to neutralize that cost, you have to help them move closer to their goal - by releasing their comrades, ceding territorial control, or something else that they perceive as a tactical or strategic advantage.

Notice how their interests are still fundamentally misaligned with yours. If anything, they've only reinforced that by holding innocent civilians hostage. You could argue that perhaps saving the hostages offers a higher benefit than the cost you incur by helping terrorists. Is this plausible? Perhaps I cherry-picked a particularly bad example in this post?

Reframing the situation helps. When a terrorist group murders an equal number of your fellow citizens by planting a bomb in a shopping mall, that is a message to you that it can happen again. And it probably will. But most people don't then pressure their government to negotiate with terrorists to avoid the next bombing. People generally recognize that as a society, we have to be willing to pay some price to live freely and repel brutal adversaries. So you should ask why this intuition changes when people are taken hostage?

Moreover, we will always be at the losing end of information asymmetry in these situations. When terrorists demand that we release prisoner A or reduce military presence in location X, we don't have a full handle on exactly how it will help them strategically, which makes it easier for us to lie to ourselves. But we should expect them to have better information about what would help them strategically and expect that giving in will be against our own strategic interests.

Why do states negotiate with terrorists?

Why do people negotiate with terrorists then, if it's not in their interests? Because terrorists correctly recognize that they can capitalize on misaligned interests within democratic societies. When viewed through the lens of long-term self-interest of the nation state, it's clear that caving to terrorism is misguided. But to the families of hostages, the benefit of retrieving a loved one is almost infinitely greater than the diffused costs of future attacks, which have only a small probability of directly affecting them. Most families thus pressure their governments to "do whatever it takes" to bring their loved ones back.

These negotiations turn into a classic public choice problem. The concentrated benefits to a small group (hostages and their families) create intense pressure on policymakers, while the diffuse costs to society at large are easier to overlook or discount. Moreover, the emotional appeal of saving identifiable lives tends to override the rational calculus of people who are not directly affected too. So when governments cave, it is because doing so is in the rational interest of a few and by extension, in the rational self-interest of decision makers, not the nation.

The only obvious solution is to credibly pre-commit not to negotiate with terrorists for hostages, as the United States has done. USG has at least once publicly violated this commitment by selling arms to Iran in exchange for securing the release of American hostages held by Hezbollah. Regardless, we’re unlikely to find evidence of efficacy of any such commitment by a single nation, since most kidnappings are opportunistic with very little nation-specific targeting. This leaves us with yet another international coordination problem.

Israel’s Dilemma

I opened with an example that's far less painful than the topical one - Israel's ongoing hostage negotiations with Hamas. Israeli politicians need no utility calculations or abstract game theory to recognize how hostage deals tend to turn out. In order to save one abducted Israeli soldier, Gilad Shalit, Israel released over 1,000 Palestinian prisoners including Yahya Sinwar - a move that saved one Israeli life and killed over 1,400 Israelis and an order of magnitude more Palestinian civilians. Yet, many Israelis have convinced themselves, in the face of understandable pressures, that this time is different.

Hamas' immediate goal is to ensure its survival and increase the likelihood that it will eventually control Gaza. Gaza is Hamas' home turf and it knows exactly what factors are most important for its survival. They almost certainly know this better than anyone in Israel. If they are willing to release hostages and give up all the leverage they currently have, it will be for something that increases their likelihood of survival. Giving Hamas anything that increases its likelihood of survival cannot be in Israel's interests as a nation.

The fact that your adversary is a Jihadist death cult should only make you less inclined to negotiate. These are people who have internalized an ideology that makes them fear death far less than most of us. Moreover, Israel has indicated it would happily give amnesty to Hamas leaders in exchange for a full hostage release and complete disarmament. If Yahya Sinwar's goal was just to survive and live as a rich man, he would have already found a way to make that happen. The fact that he's willing to walk away from the deal on the 'Philadelphi corridor' issue is itself rich in information. This is at least one factor that Hamas considers instrumental to its survival; more so than any debate about which prisoners get released, and that is reason enough not to give it to them.

Netanyahu is a distraction

A high proportion of Israelis see the central problem as Netanyahu's intransigence, apparently motivated by his desire to cling to power. Notwithstanding the validity of the moral indictment on Netanyahu, this is not a serious explanation of the incentives at play here.

The anti-Netanyahu crowd seems to be making these implicit claims: that a hostage deal worth taking is on the table; and that Netanyahu is adding terms and conditions that are likely to sabotage the deal.

For all the reasons I've highlighted above, it's unlikely that a hostage deal worth taking is on the table unless Hamas is seriously miscalculating. It's not impossible, but Israelis should be skeptical of assuming this when doing so also happens to justify taking the emotionally easier, short-term focused decision.

But I guess Israelis could tell me and everyone else to fuck off and hold Netanyahu responsible for not doing a deal most of the country wants to do. But this results in a contradiction given the motivations they attribute to Netanyahu. If walking away from a deal is advantageous to him politically, it is presumably because it represents the interests of people in his coalition, who in turn represent a significant part of Israel's population.

It could be that Netanyahu's coalition is grossly misrepresenting voters' interests on this issue. But it seems much more plausible that on this issue, Netanyahu’s critics are letting their disdain for him obscure the impossibility of a “good deal”.