By Theodoros Apostolos Koutsoumpas

Donald Trump returned to the presidency of the United States almost a year ago. In such a brief period of time though, he has moved away, or threatened to do so, substantially from many of the positions that underpinned American foreign policy for decades. Limiting or cutting support for Ukraine in the war against Russia while embracing Kremlin as reasonable partner, being on the process of imposing tariffs to European and American allies while pressing them to spend more on their defence and interfering in the Israel-Iran conflict are some of the foreign policy highlights of his tenure so far. The results have been the decrease of trust among America’s allies, a more uncompromising Russian stance in Ukraine and Eastern Europe, a free rein in Israel’s ambitions and Middle East again in turmoil.

Answering the question of whether all these actions truly signify or will ultimately lead to a changed international environment is not the purpose of this article. However, it can be commonly admitted that Trump opts for some changes to happen. And not necessarily simple things, but a great part of the architecture of the international system which, in his view, fails to serve the American interests. Putting it in IR jargon, he wants a change in status quo. In other words, he thinks that the US is losing.

If we are (once more) to rephrase this idea, Donald Trump believes that the United States is in the domain of losses. This is the part where prospect theory, a theory describing decision-making at risk conditions enters the room. The domain of losses is one of its key concepts that have been used, along some of its other descriptive schemata, in understanding foreign policy decision-making. In many occasions however, this and many other behavioral and psychological theories have been applied in International Relations in a way against their conceptual bases. Revisiting the concept of the domain of losses and its relation with Trump’s foreign policy helps to draw wider and interesting conclusions about the application in IR of theories that do not share the mainstream ontological and epistemological canon.

Firstly, one should define prospect theory in order to trace the possible relations between foreign policy decision-making and the domain of losses. As said above, prospect theory is a behavioral (psychological in essence) theory that deals with decision-making under risk. It was developed by Kahneman and Tversky in 1979 in an effort to address the shortcomings of expected utility theory that was the dominant model in describing how people make decisions (Kahneman & Tversky, 1979). The main idea behind prospect theory is, to put it simply, that the individual does not always decide among different prospects by weighting their net assets, i.e. the probabilities of each one to happen. Rather than that, the individual frames their decision around a personal reference point (describing the status quo) in relation to which they identify if they are in the domain of gains or in the domain of losses. Being in the domain of gains is generally connected to the adoption of risk-averse behavior while being in the domain of losses is associated with a risk-acceptant mentality (Levy, 1992). Although many is written about the circumstances under which this hypothesis holds and the variations that can occur in the two stages of decision-making process according to the theory, the editing and evaluating stage, for the purposes of this analysis it should be kept in mind that the domain of losses a) is a self-identified area and b) is correlated with a behavior more prone to taking risks.

Applied to International Relations, the concepts of domains of gains and losses have been or can be linked to major foreign policy decisions, usually involving the outbreak of war or crises. The Arab-Israeli war of 1973 is a common example as are the War of the Falklands in 1982, the Iraqi invasion of Kuwait in 1991, and more recently the Chinese aggressiveness in South China Sea and Taiwan, the Russian invasion of Ukraine and the explosive situation in the Middle East. In each of these cases and in many more, the willingness of actors to undertake a risk is measured by how deeply this actor can be found in the domain of gains or losses according to their reference points. Or, more accurately, what is believed to be their reference points.

The process of framing the situation and defining a reference point is central in prospect theory. Seeing it from the outside, one can assume the reference point of an actor is defined by the current status quo, i.e. if they seem to win or lose from it. Putting aside the possibility that this reference point may move to a past status quo should a new situation arise and thus modify substantially the aforementioned actor’s stance towards a subject, here comes once again the haunting IR question: who acts? It is common in International Relations to attribute individual qualities to the state and personify it, speaking, for example, about what are the actions of France or the US, assuming it to be an indivisible suprahuman –yet in some way very human- entity with timeless presence, needs and interests. But, if we choose a more complicated way of viewing things, the individual, the human factor in key positions of responsibility weighs more in the analysis. This is when Trump’s case points towards this direction.

Trump’s case is interesting in many ways. Here it is worth-mentioning not for his heretic views and perhaps unsophisticated actions in foreign policy. There is something more in this. According to the majority of external or internal analysts who would wish to apply prospect theory, the US as state, as an independent actor, could not be described as being in the domain of losses in the world stage, at least not in the majority of cases. So it goes, it is highly unlikely that America could adopt a provocative, risky behavior that could jeopardize its alliances and contribute to wider world instability in a system made and largely sustained by the US might. Well, as it was mentioned above, President Trump does not share this view. And he acts accordingly, shaping the American foreign policy in contrast to the ideas of everyone seeing the United States, and indeed every state, as a unified actor, stable inside the boundaries of a systemic continuum.

What lessons can be drawn from this disharmony? In an early approach, it could be stated that prospect theory is not applied in a way close to its behavioral origins and purposes but more as an external part to the dominant epistemological fabric in the International Relations. Both neorealism and mainstream constructivism advocate, under different jargons, in favor of the omnipotence of the system against the role of the individual in shaping the international environment (Waltz, 1979; Wendt, 1999). Using the state-actor model in prospect theory, not only diminishes it to a mere “behavioral explanation” of the realist notion of status quo but it can lead, as we witnessed above, to serious miscalculations and erroneous conclusions.

Going a little deeper, it can be observed that prospect theory is just an example of a long practice in IR. Staying true to the tendency of seeing international phenomena as the products of great aggregations – what has been named as “aggregation problem”- IR scholars, even when importing theories outside of the scientific field of International Relations or political science generally, distort them in order to fit in the dogmatic limits of the mainstream theoretical paradigms (Gildea, 2020). This is a worrying sign of crippled implementation and biased interdisciplinary dialogue inside the field of International Relations that easily resembles the famous phrase from the classic film Il Gattopardo: “everything has to change for everything to remain the same”.

To conclude, the example of Donald Trump in foreign policy demonstrates the shortcomings of the application of prospect theory in IR and these shortcomings reveal a pattern of weaknesses in implementing theories outside International Relations to issues treated as an ideological domaine réservé inside the field. Paying more attention to the true spirit of the theoretical notions of each imported approach (in the case of prospect theory, looking at the individual) not only democratizes and advances research in International Relations but also increases their scientific credibility.

References
Gildea, R. J., 2020. Psychology and aggregation in International Relations. European Journal of International Relations, 26(1), pp. 166-183.
Kahneman, D. & Tversky, A., 1979. Prospect Theory: An analysis of decision under risk. Econometrica, 47(2), pp. 263-291.
Levy, J. S., 1992. An Introduction to Prospect Theory. Political Psychology, 13(2), pp. 171-186.
Waltz, K. N., 1979. Theory of International Politics. Philippines: Addison-Wesley Publishing Company.
Wendt, A., 1999. Social Theory of International Politics. Cambridge: Cambridge University Press.