IT IS ACKNOWLEDGED THAT THE POSITIONS DISCUSSED, 'NO RANSOM' OR NEGOTIATION, ARE SUPPORTED BY CONVINCING ARGUMENTS, BUT ARE ALSO ACCOMPANIED BY INHERENT DISADVANTAGES. TESTS OF THE TWO POSITIONS ARE PRESENTED, SHOWING MIXED RESULTS. THE FRENCH ENGAGED IN A SHOOTOUT WITH SOMALI TERRORISTS; WHILE THE TERRORISTS WERE KILLED, THERE WERE ALSO HOSTAGE CASUALTIES. THE BRITISH AND DUTCH TOOK A WAIT-AND-SEE POSITIN AND WERE ABLE TO STALL THE IRISH REPUBLICAN ARMY AND THE SOUTH MOLUCCANS, RESPECTIVELY, INTO SURRENDER. THE ETHIOPIANS REFUSED TO GIVE IN TO TERRORIST DEMANDS AND THE KIDNAPPING OF CITIZENS OF ITALY, TAIWAN, AND THE UNITED STATES FOLLOWED. IT IS SUGGESTED THAT THE ANSWER IN DEALING WITH HOSTAGE SITUATIONS MAY LIE SOMEWHERE BETWEEN THE STATED 'NO RANSOM' POSITION AND A PRAGMATIC VIEW OF ON-THE-SCENE BARGAINING. IT IS PROPOSED THAT AN APPROACH AIMED AT CREATING A NEW SELF-IMAGE FOR THE TERRORISTS BY GAINING THEIR COMMITMENT TO WHAT CAN BE PRESENTED AS HUMANITARIAN POLICIES SHOULD BE UTILIZED. THIS WOULD INVOLVE URGING THEM TO RELEASE SOME OF THEIR PRISONERS OR ALLOWING FOOD AND MEDICAL AID TO BE SUPPLIED. IF THE TERRORISTS WOULD AGREE TO INCREMENTAL MOVES IN THIS DIRECTION, THE PROCESS MIGHT CONTINUE UNTIL ALL HOSTAGES ARE RELEASED. SUCH TACTICS APPEAR TO HAVE BEEN SUCCESSFUL WHEN APPLIED, AND REPRESENT AN OPTIMAL MIX OF THE ADVANTAGES CLAIMED FOR THE TWO POSITIONS DISCUSSED. TABULAR DATA ARE PROVIDED. (RCB)