The Situation in The Middle East from the Perspective of Prospect Theory: “Hedging” or “Speculating”

Abstract

Prospect theory, which emphasizes the non-linear relationship between risk and reward, is an important concept in the fields of psychology and behavioral economics, and focuses on the decision-making process of individuals in the face of risk and uncertainty. In the field of international relations, Prospect Theory is of great significance to the study of decision-making of international actors. This paper combines the overall framework of Prospect Theory, based on the relevant theoretical doctrines of geopolitics, and sets the risk perception and potential benefit seeking of the two parties as independent variables, and the decision-making behavior and strategic choices of the two parties as dependent variables. By analyzing the behavioral patterns of the participants and exploring their “hedging” and “speculative” behavioral choices, we can better understand their decision-making process and perhaps provide valuable insights into their search for a peaceful solution.