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Psychology's Prospect Theory: Relevance for Identifying Positions of Local Satiation as Robust Reference Points of Joint Actions in Peace Agreements

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Author Info
Johan Moyersoen (University of Oxford)
Abstract

This paper proposes a new approach to identify robust joint actions for groups in conflict. It puts forward the concept of stable neighborhood positions or positions of local satiation. Positions of local satiation are positions of joint action where a small deviation of either of the belligerent groups from that arrangement does not increase one's benefit. The paper seeks to support its argument in two ways. First, it gives a descriptive foundation extracted from prospect theory for the concept of positions of local satiation. Especially the concept of myopic loss aversion that embraces narrow framing and local loss aversion is employed. Second, it tries to apply the concept of stable neighborhood positions in a case study. The case study unravels an investment conflict in the city of Brussels, Belgium.

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Article provided by Berkeley Electronic Press in its journal Peace Economics, Peace Science and Public Policy.

Volume (Year): 10 (2007)
Issue (Month): 1 ()
Pages: 2
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Handle: RePEc:bep:pepspp:10:2007:1:2

Note: oai:bepress:peps-1066
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  1. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-91, March. [Downloadable!] (restricted)
  2. Thaler, Richard H, et al, 1997. "The Effect of Myopia and Loss Aversion on Risk Taking: An Experimental Test," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 647-61, May.
  3. Benartzi, Shlomo & Thaler, Richard H, 1995. "Myopic Loss Aversion and the Equity Premium Puzzle," The Quarterly Journal of Economics, MIT Press, vol. 110(1), pages 73-92, February. [Downloadable!] (restricted)
    Other versions:
  4. Payne, John W & Bettman, James R & Schkade, David A, 1999. "Measuring Constructed Preferences: Towards a Building Code," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 243-70, December. [Downloadable!] (restricted)
  5. Dixon, William J, 1996. "Third-Party Techniques for Preventing Conflict Escalation and Promoting Peaceful Settlement," International Organization, MIT Press, vol. 50(4), pages 653-81, Autumn.
  6. Nicholas Barberis & Ming Huang & Tano Santos, 2001. "Prospect Theory And Asset Prices," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 1-53, February. [Downloadable!] (restricted)
  7. Collier, Paul & Hoeffler, Anke, 2002. "Aid, policy, and growth in post-conflict societies," Policy Research Working Paper Series 2902, The World Bank. [Downloadable!]
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  8. Caroline Hartzell & Matthew Hoddie & Donald Rothchild, 2001. "Stabilizing the Peace After Civil War: An Investigation of Some Key Variables," International Organization, MIT Press, vol. 55(1), pages 183-208, March. [Downloadable!] (restricted)
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