According to this UPI column, the CIA thinks that Saddam is alive, and being moved from one safe house in Baghdad to another.

I don't know whether it's true or not (it's certainly not implausible), but what I found interesting was this:

According to U.S. intelligence officials, Saddam and his entourage simply move in with a private family. Members of the family, including children, are taken as hostages so that no other family member will be tempted to inform on Saddam's whereabouts.

These sources said that when Saddam is ready to move to another safe house, the hostages are returned and the family is paid as much as $50,000 for the temporary use of their home.

Now Saddam and his family are notorious for their brutality, so to actually return the hostages seems a little out of character. But from a game theory standpoint, it makes perfect sense.

There's a classic game theory construct called the Prisoner's Dilemma. From the link:

Tanya and Cinque have been arrested for robbing the Hibernia Savings Bank and placed in separate isolation cells. Both care much more about their personal freedom than about the welfare of their accomplice. A clever prosecutor makes the following offer to each. "You may choose to confess or remain silent. If you confess and your accomplice remains silent I will drop all charges against you and use your testimony to ensure that your accomplice does serious time. Likewise, if your accomplice confesses while you remain silent, they will go free while you do the time. If you both confess I get two convictions, but I'll see to it that you both get early parole. If you both remain silent, I'll have to settle for token sentences on firearms possession charges. If you wish to confess, you must leave a note with the jailer before my return tomorrow morning."

Note that for both prisoners they are incentivized to confess, with either an outcome of going free (if the other doesn't), or getting early parole. The worst case is to not confess and get screwed by your partner in crime.

The interesting thing about the game is that if, as in this case, it's only played once, there's no point in cooperation--there's no way to punish your partner for screwing you over. But if it's a repeated game, where you'll be interacting with that person in the future, it become in your interest to cooperate, rather than defect, because mutual cooperation offers the best value for both. This is the basis for much of Robert Axelrod's work in computer simulations, to mimic the evolution of cooperation as a useful characteristic of organisms.

So how does this apply to Saddam? Not in the structure of the dilemma itself, but in the fact that he has to now take into account future interactions in a way that he's never had to in the past.

When he was in power, he could use and abuse people as he pleased, with no apparent consequences. Now, on the run, he's vulnerable. It might please him to just murder the hostages when he's done with them, and stiff the family for the money, but if he does so, and word gets out, the next home he tries to take over won't cooperate, since there's nothing to gain by doing so.

When he was the state, he didn't have to behave honorably. Now that he's in somewhat of a state of anarchy, on a more equal footing with the populace, he must.