Loss Aversion in Territorial Disputes: An Empirical Test

• In Event: Territorial Disputes

Abstract

Since Daniel Kahneman and Amos Tversky introduced prospect theory, international relations (IR) scholars have theorized extensively about how prospect theory can explain a variety of phenomena in world politics. Yet there is little systematic empirical evidence on whether, when, and how prospect theory affects international politics or foreign policy. We explore how prospect theory can help us better understand territorial conflict. We employ experimental methods to measure framing effects on actors' preferences in the context of territorial bargaining. Specifically, we field survey experiments on nationally representative samples in Chile and Argentina in which we manipulate the framing of a prompt about disputed territorial claims in Antarctica. We then measure respondents' propensity to choose between either a certain gain/loss or a lottery with the same expected payoff. We thus introduce two major innovations into the study of prospect theory in IR: 1) we run an experiment in the context of an actual territorial dispute, and 2) we test how the results are affected by the introduction of an opponent, an essential element in international politics but under-studied in canonical research of prospect theory. The evidence generated by this experiment will have wide-ranging implications for international relations scholarship, shedding light not only on the psychological microfoundations of territorial contestation but also on broader questions of bargaining and international conflict.

Authors

• Andi Cam Zhou, Harvard University

• Henk Erich Goemans, University of Rochester

• Michael Lee Weintraub, Universidad de los Andes