The Deadline Game, applied and extended step by step throughout this book, combines two Trust Games. Both actors can keep from contracting, and each gets a chance in the course of the game to turn sequentiality to his own advantage. Thus, the Deadline Game has a special outcome, mutual cheating, that does not exist in the Trust Game. We proposed a list of empirically reasonable assumptions concerning the components of the payoffs in the game and derived payoff ordering from that. In the second step we introduced hostages to the model.
Hostages are special devices designed so as to create credible commitments.
Briefly, hostages can be seen as a sort of weapon turned against the hostage poster and given in the hands of the other party. They can be used in case something goes wrong with complying with the promises of the contract. The size of hostages raises complex questions. We focused solely on the minimal size. Hostages were accepted as sufficiently large, if losing them made more losses than the gains derived from cheating the other party.