Loss Aversion and Foreign Policy Resolve

Berejikian, Jeffrey D.; Early, Bryan R.

doi:10.1111/pops.12012

Cited by 21 publications

(17 citation statements)

References 78 publications

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“…189-199) has been found to explain a wide variety of apparently ''irrational'' choices and behaviors, in different contexts. An interesting recent application is Berejikian and Early (2013), who use the endowment effect to explain ''foreign policy resolve,'' or the willingness of nations to expend substantial resources to win back concessions, territory, or favorable policies that are perceived as belonging to the nation. They seem much less willing to expend resources or take risks to obtain equivalent new benefits of comparable or even larger size.…”

Section: Loss Aversion/endowment Effectsmentioning

confidence: 99%

The anatomy of government failure

Keech

Munger

2015

Public Choice

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Government failure is a much bigger problem than its contemporary treatment implies. Setting aside natural disasters, most of the great catastrophes of human history have been government failures of one sort or another. We argue that many so-called market failures are government failures because government defines the institutions in which markets succeed or fail. The concept of government failure has been trapped in the cocoon of the theory of perfect markets. Narrowly defined deviations from market perfection have been designated market failures, for which government corrections may or may not really be a solution. Government failure in the contemporary context means failing to resolve a classic market failure. We propose an alternative approach for evaluating whether government fails: the Pareto standard. If an available Pareto improvement is not chosen, or is not implemented, that is a government failure. We organize government failure into two types: substantive and procedural. Substantive failures include the inability or unwillingness to maintain order, to maintain sound fiscal and monetary policies, and to reduce risks of transaction costs, which we classify as corruption, agency and rent-seeking. Procedural failures are inadequacies of available social choice mechanisms, causing collective decisions to be arbitrary, capricious, or manipuated. We conclude with some reflections on human rationality and the implications of behavioral economics.

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Section: Loss Aversion/endowment Effectsmentioning

confidence: 99%

The anatomy of government failure

Keech

Munger

2015

Public Choice

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“…In the domain of international conflict, risk seeking in losses principally manifests in four ways. First, decision making elites are likely to advocate riskier (and perhaps more conflictual) foreign policies to preserve their state's reputation or position in international politics than they would advocate to improve that reputation or position (Berejikian and Early 2013;Jervis 1992: 192-193;Levy 2000Levy : 200-210, 2003; see also Renshon 2015). Second, if a violent conflict has begun, decision makers are likely to view sunk costs like casualties "as a certain loss in the absence of further action" (Levy 2000: 204; see also Renshon 2015) and therefore persevere to make sure the casualties have not been in vain.…”

Section: Errors and Biasesmentioning

confidence: 99%

“…The perceptions that resolve in negotiations and assertive or aggressive acts can cow an opponent serve to buttress hawkish decision makers' predilection for intransigence and forcefulness in foreign policy.While the other biases and errors I have discussed serve mainly to foster hawkish decision makers' inflexibility in negotiations, the risk seeking in losses bias encourages warhawks, hawks, and chickenhawks to take forceful foreign policy positions. Specifically, this bias makes hawkish elites likely to advocate risky conflictual foreign policy action to avoid granting concessions to an adversary or otherwise incurring certain losses at the hands of an opponent (seeBerejikian and Early 2013;Farnham 1992;Jervis 1992;…”

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confidence: 99%

Of Six Minds on the Matter: A Psychology-based Typology of Hawkish and Dovish Decision Makers

Brown¹

2011

PsycEXTRA Dataset

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Foreign policy elites are often labeled "hawks" or "doves," and states' foreign policies can vary widely depending on whether hawks or doves prevail. Yet seldom asked is this question: why are some elites hawks and others doves? I seek to answer this question. A few previous studies also address this question. However, they typically suffer one or both of the following shortcomings. First, they often overlook variations among elites within the hawk and dove categories. Second, they typically fail to systematically assess the characteristics distinguishing hawks from doves. I provide an improvement by systematically assessing the characteristics distinguishing hawks from doves and exploring differences among elites within the two categories. Specifically, I propose a psychology-based six-fold typology comprising three hawkish and three dovish decision maker types. I distinguish among the types via differing operational codes, personality traits, hypothesized susceptibilities to cognitive errors/biases, and hypothesized foreign policy positions. To test my typology's validity, I examine content analysis of selected George W. Bush administration officials' verbal behavior. This facilitates determining if elites are classifiable via my typology. To test my typology's hypotheses, I use congruence analysis of selected elites' decision making leading up to the 2003 United States-led invasion of Iraq. This qualitative analysis allows me to determine the errors and biases to which examined elites are susceptible and the elites' policy positions. I would like to offer to my committee heartfelt thanks for their assistance with what has been a long process. Juliet Kaarbo, co-chair of my committee, has been generous beyond all reasonable expectation. She has patiently encouraged, guided, and helped me even as her career took her across the Atlantic. I owe her a tremendous debt of gratitude. Mark Joslyn, also co-chair of my committee, has given me crucial moral support. Further, he and Donald Haider-Markel have played key roles in shepherding this project. I cannot overstate the importance of their support and the support of my entire committee. Above all, I thank my wife and family. They have tirelessly stood by me over the years, and the completion of my dissertation would not have been possible without them. v Table of Contents Introduction 1-14 Chapter 1: Theoretical Framework 15-98 Chapter 2: Research Design 99-130 Chapter 3: Quantitative Analysis of Personality Trait and Beliefs 131-170 Chapter 4: Qualitative Analysis of Decision Making 171-227 Chapter 5: Conclusion 228-233 References 234-246 Appendix A 247

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“…Individuals with more knowledge and investment experience tend to be less loss averse. This means that loss aversion can be mitigated with experience (Berejikian & Early, 2013;Bokhari & Geltner, 2011).…”

Section: Loss Aversionmentioning

confidence: 99%

Behavioural factors in the financial decisions of young Mozambicans

Mota

Moreira

Cossa

2015

SAJBM

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This paper seeks to analyse how behavioural factors influence the financial decisions of young Mozambican investors. The standard theory of finance assumes investors make rational financial decisions, seeking to minimise risk and maximise their expected utility. However, several studies have been conducted criticizing the assumption that investors are rational, opening the way to behavioural finance theory. According to the behavioural finance approach, financial decisions made by individuals are not based on rational thinking and their risk taking behaviour depends on their beliefs or feelings. Our analysis reveals that young Mozambicans are risk averse towards certain gains and risk lovers when faced with certain losses; they are excessively optimistic about the future; they use the information available as an anchor for their estimates; and they are so overconfident that they believe estimates in uncertain situations to be more accurate than they really are.

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Loss Aversion and Foreign Policy Resolve

Cited by 21 publications

References 78 publications

The anatomy of government failure

The anatomy of government failure

Of Six Minds on the Matter: A Psychology-based Typology of Hawkish and Dovish Decision Makers

Behavioural factors in the financial decisions of young Mozambicans

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