Credible promises and hostage mechanisms can support a continuous stream of cooperative exchanges except when
A) the promisor is better off fulfilling than ignoring his promise
B) neither party has a prior dominant strategy
C) the hostage can be revoked for just causes
D) the hostage is more valuable than any given exchange
E) the hostage is difficult to replace

Question

Quizplus · Accepted Answer

If the hostage can be revoked for just causes, the threat of losing the hostage is weakened, and the mechanism loses its effectiveness in ensuring cooperative behavior.

Credible Promises and Hostage Mechanisms Can Support a Continuous Stream