Daniel Kahneman and Jonathan Renshon have a great article in the new Foreign Policy magazine on "Why Hawks Win." They describe some of the mental biases discovered by Prospect Theory, and explain how these biases affect our foreign policy decisions. (Last week, I speculated on the influences of loss aversion on Bush's decision to escalate the Iraq war.)
PS. For a contrarian perspective, check this out. I agree that loss aversion isn't always a negative trait. Sometimes, it provides us with the sort of stubborness that victory requires. But it does become a dangerous bias when we refuse to take it into account, and don't realize that our brains are biased in a certain direction. The only way to defeat our irrational heuristics - all of which can be adaptive in certain situations - is to become aware of them, and factor them into our decision-making process. Needless to say, this isn't something Bush or his advisors regularly do. Instead, they commit the opposite mistake, and regularly discount the adverse risks of war. (These are the same folks who promised that the war would be a "cakewalk," and that our troops would be greeted as "liberators.")
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That was an interesting article. thanks for the link. Where can I find out more about prospect theory?
The Nobel Prize website (www.nobel.se) has a slightly more complicated introduction to prospect theory (compared to Wikipedia) and some other references under Daniel Kahneman's prize citation.
You probably know a lot about prospect theory already. Just think about how you make decisions and why.