When the claim hits: bilateral investment treaties and bounded rational learning

Lauge N. Skovgaard Poulsen and Emma Aisbett

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Using the international investment regime as its point of departure, the paper applies notions of bounded rationality to the study of economic diplomacy. Through a multi-method 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 consistently 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.

Keywords: bounded rationality; international political economy; international economic law; bilateral investment treaties (search for similar items in EconPapers)
JEL-codes: F00 F02 F13 F20 F21 F23 F51 F53 K33 (search for similar items in EconPapers)
Date: 2013-04
New Economics Papers: this item is included in nep-cbe and nep-int
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Citations: View citations in EconPapers (28)

Published in World Politics, April, 2013, 65(2), pp. 273-313. ISSN: 0043-8871

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http://eprints.lse.ac.uk/45035/ Open access version. (application/pdf)

Related works:
Working Paper: When the Claim Hits: Bilateral Investment Treaties and Bounded Rational Learning (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:45035

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