What's Wrong With IPE? Insights from Behavioral Economics and Political Psychology.

Most international political economy (IPE) analysis seeks explanations for decisions made by individuals over economic issues. It is highly puzzling, then, that a discipline devoted to understanding decisions has utterly failed to follow research in related disciplines like psychology or economics that focus attention on the processes of decisionmaking. Behavioral economists and behavioral finance researchers have taken concepts from political psychology and dramatically altered the framework for research questions. Although neoclassical economic models never promised that individuals actually behaved as the models suggested, new research indicates how significantly inadequate such models are in explaining real-world outcomes.I suggest that IPE scholars have ignored these trends in economics for at least six reasons: 1) we believe that individuals behave "as if" neoclassical assumptions of behavior were true; 2) we assume that individual departures from these assumptions "wash out" in the aggregated settings we study in IPE; 3) we assume that rationality is a viable baseline for measuring behavior; 4) we favor parsimony over chaos; 5) we are concerned about the methodological challenges of building ever-more complex models; and 6) we are basically ignorant about developments in other disciplines. But none of these reasons for ignoring research elsewhere holds up under scrutiny. In fact, IPE risks becoming ever-marginalized and more insular. In this paper, I highlight three useful concepts from behavioral economics, including loss aversion and framing, myopic decisionmaking, and concerns over fairness. I suggest applications of these insights to IPE research by reformulating several recent International Organization articles to show how scholars might usefully incorporate new research approaches. If I am correct about the promise of the behavioral revolution, it holds significant potential for breakthroughs in IPE research for the future. We ignore it at our peril. ..PAT.-Conference Proceeding [ABSTRACT FROM AUTHOR]