It may be difficult to discern given the high baseline of histrionic pronouncements by the White House, but President Trump’s policy toward North Korea is one of escalating claims for success. While non-proliferation experts and diplomats have cautioned that the administration needs to be more realistic in its expectations, the administration has been doing the exact opposite. Trump’s method has been described by a prominent New York Times expert on nuclear issues as “a bold and innovative approach.” Which is true: The president’s approach to foreign policy is an adventurous one that has not been attempted in American foreign policy for at least 70 years.
In fact, it calls to mind Daniel Kahnemann and Amos Tversky’s prospect theory in behavioral economics. So much so, that it may be considered a real-time, real-world experiment.
Prospect theory explores how people make decisions under considerations of varying risk. It also explores whether winning streaks and losing streaks really exist. Its major finding (for which Kahnemann and Tversky were awarded the Nobel Prize in economics) is that we tend to see “risk-aversion in choices involving sure gains and risk-seeking in choices involving sure losses.” That is, people are more risk-tolerant when attempting to regain what has been lost. So, a gambler who is winning will then confine herself to more probabilistically likely outcomes (safer bets), thereby increasing the likelihood of continued gains (a winning streak). But a gambler who’s losing will grow increasingly desperate to replenish her losses and make riskier bets.