PROSPECT THEORY AND POLITICAL SCIENCE Jonathan Mercer

4 MERCER
to assume either that the original formulation of the prospects leaves no room for
further editing, or that the edited prospects can be specified without ambiguity”
(pp. 29–30). Outside of the lab, we create our own frames, and this complicates
using prospect theory to explain political decisions. Political scientists using or
reviewing prospect theory always point out the lack of a theory of frames. As Levy
(1997) noted, prospect theory “is a reference-dependent theory without a theory
of the reference point” (p. 100). Whether an actor is risk acceptant or not depends
on whether the actor is in a domain of loss, which is why the absence of a theory
of frames is potentially such a problem.
Political scientists using prospect theory all wrestle with the problem of determining
an actor’s or a group’s frame. The obstacles are formidable and the
temptation to reason backwards, from choice to domain to frame, is strong. We
create both our frames and our choices, and disentangling them is hard. Should we
focus on individuals (Davis 2000, Farnham 1997, McDermott 1998) or on groups
(Berejekian 1997, Taliaferro 2004)? Is cognition (McDermott 1998) or emotion
(Farnham 1997) the key to explaining frames? If slight changes in design can affect
framing effects in the lab (Boettcher 2004), then predicting frames in uncontrolled
field settings is daunting. The observation that rational choice models suffer similar
defects—rationalists do not have a theory of preference, and one can often reverse
a rational model’s predictions by changing slightly its parameters (Neral & Ochs
1992, Jung et al. 1994)—may comfort political psychologists but hardly solves the
problems. As Jervis (2004) suggests, “Ingenuity and careful research can reduce,
but not completely eliminate, these difficulties” (p. 172). Political psychologists
rely on one or more of five complementary techniques for determining an actor’s
domain: status quo as reference point, aspiration as reference point, heuristics,
analogies, and emotion.
Status Quo as Reference Point
Actors commonly use the status quo as a reference point for determining their
domain. When we are satisfied with the status quo, we tend to be in a domain of gain;
when we are dissatisfied, we tend to be in a domain of loss. Because satisfaction
is subjective and because no general theory of satisfaction exists (Kahneman et al.
1999), analysts must study the details of a decision maker’s situation, goals, and
motivation. In many cases, assessing an actor’s domain is simple: Is the status quo
acceptable or not? When actors find their political position deteriorating, they are
likely to view themselves in a domain of loss. Examples include Kaiser Wilhelm
in the first Moroccan crisis (Davis 2000, Taliaferro 2004), the Japanese leadership
before the attack on Pearl Harbor (Levi & Whyte 1997), President Carter during
the Iranian hostage crisis (McDermott 1998), Prime Minister Eden in the Suez
crisis (McDermott 1998, Richardson 1993), President Truman during the Korean
War (Taliaferro 2004), and President Kennedy in the Cuban missile crisis (Haas
2001, Whyte & Levi 1994). In each case, foreign policy setbacks led policy makers
to desire a return to a pre-crisis status quo.