PROSPECT THEORY AND POLITICAL SCIENCE Jonathan Mercer

10 MERCER
Emotion
Although Kahneman & Tversky emphasized cognition, emotion is central to
prospect theory. Actors do not consult utility; they experience it (Kahneman
1994, Kahneman & Tversky 1984). As one decision theorist noted, “The effects
of changes from reference points are feelings, or changes in hedonic states”
(Read 2002, p. 471). “Experienced utility” captures the finding that we care more
about recent changes in our welfare than we do about our total value position.
We are not indifferent to our net assets, but what influences us most is the direction
of change, whether it is a gain or a loss relative to some reference point.
Emotion’s influence on decision making is thus fundamental to prospect theory
and to political science more generally (Bueno de Mesquita & McDermott 2004,
McDermott 2005). My subjective feelings of gain or loss influence my choices.
Although greed is important and provides the inspiration in most rationalist treatments
of self-interest (Hirschman 1977), other emotions, such as fear, anger, regret
(Jervis 1992, McDermott 2004), panic, desperation (Welch 1993a), pride (Gries
2004), desire for justice (Rabin 2002, Welch 1993b), or trust (Mercer 2005) may
be equally important.
Emotion is not merely a consequence of a frame but can be a source of framing.
Farnham (1997) demonstrates that our feelings can cause us to reframe our
choices which, in turn, can cause us to reverse our preferences. For example, President
Franklin D. Roosevelt viewed war in Europe as undesirable but as having no
direct impact on the United States, and thus he opposed U.S. intervention. As the
1938 Munich crisis unfolded, Roosevelt’s view remained constant. He expected
war and he expected the Allies to win. The crisis provided no new information
about German intentions, the dangers for Europe, or the risks for the United States.
In the midst of the crisis, Roosevelt realized that war was no longer highly probable
but certain and he began to feel emotionally engaged in the crisis: “as the president
became increasingly affected by the emotional impact of the news from Europe, he
began to experience the prospect of war as a loss” (Farnham 1992, p. 229). Bombarded
by frantic and emotionally charged messages about impending war in Europe,
Roosevelt reframed the war as a loss to the United States. Farnham confirms
the general psychological insight that often preferences are not prior to a choice but
are constructed during a choice (Shafir & LeBoeuf 2002). We figure out our preferences
as we go along, which means they are neither stable nor hierarchical. It is
not abstract ideas, dry information, or heuristics that explain President Roosevelt’s
domain, but feelings, mood, and the affect-laden reports of imminent war.
Welch (1993b) finds additional evidence that feelings influence how we frame
our prospects. Although Welch is not a prospect theorist—in this work injustice,
not loss aversion, drives risky behavior 2 —he notes that his approach provides clues
for how actors will frame their choices. Welch argues that feelings of injustice,
defined as a perceived discrepancy between entitlements and benefits, explains
2 A new book (Welch 2005) uses insights from prospect theory but arrived too late for review.