Prospect theory, first described in a 1979 paper by Daniel Kahneman and Amos Tversky, proves to be an effective tool to explain how people evaluate risk and make decisions in experimental settings. Due to remarkable insights for social sciences, prospect theory has gone beyond economics and provided insights for international relations.

From the beginning of the 21st century, Australia’s interests in the East Sea (The South China Sea to non-Vietnamese people) have been increasingly more evident. Among those, the benefits relating the status of a “middle power” and the tensions derived mainly from China's ambitions are the most prominent features. Regarding Australia’s interests in the East Sea, the author argues that Australia had better promote more practical contributions to accommodate its role and status in the Asia-Pacific region. In particular, Australia’s contributions should be based on code of conducts, international rules and norms. In this paper, the author focuses on three recommendations, including: (i) promoting cooperation in the East Sea complying with the principles and the respect for the law; (ii) promoting Security and Defense Policy in terms of soft alliances; (iii) coordinating with regional powers in search of solutions to manage conflicts in the East Sea.