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McDermott 1998). It explains that states do not make choices on the basis of profit and
loss unlike the assumption of the expected-utility theory but rather treat gains and losses
differently. According to prospect theory in international relations, states over-evaluate
current possessions, so that they are generally averse to losses (endowment effect). If a
state perceives itself to be the potential target of attack and frames the existing situation
in the domain of losses
−
which means that its inferiority will increase in the future and
that the status quo will get deteriorated further because it is in decline
−
, then the
likelihood of preventive action is high. Because the time horizon of such a declining
state is very short, the state may choose risk-acceptant behavior due to the loss-averse
attitude in a losing situation, believing that any situation is better than the current one.
Levy does not directly apply prospect theory to weaker states, but his explanation of
preventive war implies that weaker states are also likely to be loss-averse and show risk-
acceptant behavior in the domain of losses.
Drawing on the main concepts of prospect theory, I suggest a few hypotheses about
why and when weaker states challenge stronger states and choose to fight.
9
a) When a weaker state is in the domain of losses in international arena, it is more
likely to risk a war: the status quo bias.
First of all, it is significant to understand how national leaders of weaker states
perceive their domain of action when they make decisions during the crisis. As prospect
theory explains, people do not consider gains and losses in the same way but over-
9
Although this paper proposes a few hypotheses about weaker states’ risk-taking tendencies, it does not
test them. For more information about this argument, see Jihwan Hwang, “Weaker States, Risk-Taking and
International Crisis: Explaining the North Korean Nuclear Policy after the Cold War,” Ph.D. dissertation
prospectus, April 2004. University of Colorado at Boulder.
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