In the “kidnapper's dilemma,” a kidnapper abducts a victim and demands ransom in exchange for releasing her. However, once the ransom is paid out, the kidnapper is better off doing away with the victim. After all, she may provide the police with information identifying him. The victim cannot credibly commit to not revealing her abductor's identity to the police. The game has precisely the same structure as the Simple Transition Game. The strategy of releasing the victim is weakly dominated by disposing of her. How can the abducted victim save her life? How can she make her promise to the kidnapper credible? A possible solution to this dilemma, suggested by Thomas Schelling (1980), runs as follows: Suppose the victim happened to have committed some heinous crime and can supply her abductor with evidence of this crime. If she were to reveal the identity of the kidnapper, he would uncover the evidence against her. Since the disutility from being held responsible for such an act outweighs the victim's utility from punishing the kidnapper, she refrains from revealing his identity and the optimal solution is ensured. The victim “has a skeleton in the kidnapper's closet,” and the abductor will reveal it if he himself is revealed by the victim. This secret information makes the victim's commitment not to reveal any information to the police credible.

The Kidnapper's Dilemma in Pacted Transitions

In the East Central European pacted transitions, the embarrassing skeletons are files of former dissidents who were secret police informers.