Model Building With Prospect Theory: A Cognitive Approach to International Relations

Berejikian, Jeffrey D.

doi:10.1111/0162-895x.00306

Cited by 66 publications

(21 citation statements)

References 66 publications

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“…5. For example, Fershtman (1996) studies an incumbency game, Berejikian (2002) a.o. the game of chicken and the prisoners' dilemma, and Butler (2007) an ultimatum game.…”

Section: Discussionmentioning

confidence: 99%

On Loss Aversion in Bimatrix Games

2008

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ABSTRACT. In this article three different types of loss aversion equilibria in bimatrix games are studied. Loss aversion equilibria are Nash equilibria of games where players are loss averse and where the reference points-points below which they consider payoffs to be lossesare endogenous to the equilibrium calculation. The first type is the fixed point loss aversion equilibrium, introduced in Shalev (2000; Int. J. Game Theory 29(2):269) under the name of 'myopic loss aversion equilibrium.' There, the players' reference points depend on the beliefs about their opponents' strategies. The second type, the maximin loss aversion equilibrium, differs from the fixed point loss aversion equilibrium in that the reference points are only based on the carriers of the strategies, not on the exact probabilities. In the third type, the safety level loss aversion equilibrium, the reference points depend on the values of the own payoff matrices. Finally, a comparative statics analysis is carried out of all three equilibrium concepts in 2 × 2 bimatrix games. It is established when a player benefits from his opponent falsely believing that he is loss averse.

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“…5. For example, Fershtman (1996) studies an incumbency game, Berejikian (2002) a.o. the game of chicken and the prisoners' dilemma, and Butler (2007) an ultimatum game.…”

Section: Discussionmentioning

confidence: 99%

On Loss Aversion in Bimatrix Games

2008

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“…In most cases the status quo serves as the reference point, but one's aspirations or a more favorable prior status quo may also serve as the reference point (Berejikian 2002). Editing is where individuals frame a decision and it has major ramifications on one's judgment of potential choices.…”

Section: Prospect Theory: Basic Tenetsmentioning

confidence: 99%

“…Empirically, prospect theory offers explanations for phenomena previously deemed inexplicable by rational actor standards, i.e. The following is a list of prospect theory-related works in IR that were referenced in the writing of this chapter: Berejikian (1992Berejikian ( , 1997Berejikian ( , 2002Berejikian ( , 2004, Boettcher (1995), Bueno de Mesquita et al (2008), Camerer (2005), Farnham (1992), Haas (2001), Jervis (1992Jervis ( , 2004, Kühberger (1998), Levy (1992Levy ( , 1996Levy ( , 1997, Levi and Whyte (1997), Mandel (2001), McDermott (1992McDermott ( , 1998, McDermott et al (2008), McDermott and Kugler (2001), McInerney (1992), Pauly (1993), Quattrone and Tversky (1988), Richardson (1993), Rieger (2014), Rothman (2011), Shafir (1992, Taliaferro (1994Taliaferro ( , 1998Taliaferro ( , 2004, Welch (1993a, b) and Weyland (1996Weyland ( , 1998 where leaders made 'irrational' decisions. 277-284) for a detailed explanation of these functions' mathematical properties.…”

Section: Prospect Theory: Basic Tenetsmentioning

confidence: 99%

Power Politics in Asia’s Contested Waters

Fels¹,

Vu²

2016

Global Power Shift

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More information about this series at http://www.springer.com/series/10201Ample empirical evidence points to recent power shifts in multiple areas of international relations taking place between industrialized countries and emerging powers, as well as between states and non-state actors. However, there is a dearth of theoretical interpretation and synthesis of these findings, and a growing need for coherent approaches to understand and measure the transformation. The central issues to be addressed include theoretical questions and empirical puzzles: How can studies of global power shift and the rise of 'emerging powers' benefit from existing theories, and which alternative aspects and theoretical approaches might be suitable? How can the meanings, perceptions, dynamics, and consequences of global power shift be determined and assessed? This edited series will include highly innovative research on these topics. It aims to bring together scholars from all major world regions as well as different disciplines, including political science, economics and human geography. The overall aim is to discuss and possibly blend their different approaches and provide new frameworks for understanding global affairs and the governance of global power shifts.

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“…Carlson and Dacey (2004) incorporate both loss aversion and pseudocertainty in their examination of a traditional deterrence game but also take a decision-theoretical approach. Berejikian (2002aBerejikian ( , 2002b also examines deterrence by varying the gains or losses frame of the actors. He does so within an explicit game model but does not incorporate prospect theory value functions or pseudocertainty.…”

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confidence: 99%

Prospect Theory and Coercive Bargaining

Butler

2007

Journal of Conflict Resolution

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Despite many applications of prospect theory's concepts to explain political and strategic phenomena, formal analyses of strategic problems using prospect theory are rare. Using Fearon's model of bargaining, Tversky and Kahneman's value function, and an existing probability weighting function, I construct a model that demonstrates the differences between expected value and prospect theory when applied to strategic interaction. Critically important to this demonstration is an examination of different types of reference points that make sense for bargaining problems. Four types of reference points are discussed and analyzed: power-based, equity, variants of the status quo, and extreme ''I-want-it-all'' reference points. Each of these types of reference points produce different bargaining behavior at the individual level and in combination with the type of reference point of the other actor. Additionally, I demonstrate that bargaining failure is possible for this model under complete and perfect information using prospect-theoretic logic.

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Model Building With Prospect Theory: A Cognitive Approach to International Relations

Cited by 66 publications

References 66 publications

On Loss Aversion in Bimatrix Games

On Loss Aversion in Bimatrix Games

Power Politics in Asia’s Contested Waters

Prospect Theory and Coercive Bargaining

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