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When the Claim Hits: Bilateral Investment Treaties and Bounded Rational Learning

Published online by Cambridge University Press:  08 April 2013

Lauge N. Skovgaard Poulsen  and
Emma Aisbett
Lauge N. Skovgaard Poulsen
Affiliation:
Danish Research Council Postdoctoral Fellow at Nuffield College, University of Oxford, and the Copenhagen Business School, Email: skovgaard.poulsen@nuffield.ox.ac.uk.
Emma Aisbett
Affiliation:
University of Hamburg, Germany. Email: emma.aisbett@wiso.uni-hamburg.de.

Abstract

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Using the international investment regime as its point of departure, the article applies notions of bounded rationality to the study of economic diplomacy. Through a multimethod approach, it shows that developing countries often ignored the risks of bilateral investment treaties (bits) until they themselves became subject to an investment treaty claim. Thus the behavior of developing country governments with regard to the international investment regime is consistent with that routinely observed for individuals in experiments and field studies: they tend to ignore high-impact, low-probability risks if they cannot bring specific “vivid” instances to mind.

Type
Research Article
Information
World Politics , Volume 65 , Issue 2 , April 2013 , pp. 273 - 313
Copyright
Copyright © Trustees of Princeton University 2013

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