Risk aversion in international relations theory

Abstract

When international relations writers use the idea of Risk aversion, they either leave it undefined or cite the economics conception, that the decision-maker has a concave utility function for the goal. However, in the international context the goal is typically not money or any other objectively measurable quantity, and in this case the concept of concavity is meaningless. This article gives two definitions of risk aversion that are "non-metric" in the sense that they do not require such a quantity. The first, comparative risk aversion, specifies the relative degree of aversion but does not specify a zero point. The second concept, multiattribute risk aversion, does the reverse, separating risk-averters from risk-seekers in an absolute sense without making comparisons within each group. The arguments imply significant revisions of work on historical case studies using prospect theory and Fearon's categorization of rationalist explanations for war. It indicates that countries might be unable to negotiate their way out of a war because certain kinds of disputes, especially those over symbols or religious places, often generate risk-seeking behavior.