ROOSEVELT AND THE MUNICH CRISIS - INSIGHTS FROM PROSPECT-THEORY

The use of prospect theory to explain political decision-making challenges the claim of rational choice theory to provide a more convincing account of this behavior. Because President Roosevelt's decision-making during the Munich crisis manifests a number of phenomena associated with prospect theory, including a change in the decision frame and corresponding preference reversal, risk acceptance to avoid loss, and the operation of certainty effects, it affords an opportunity to view these competing claims in the light of an actual historical case. An analysis of Roosevelt's decision-making behavior during the crisis shows that prospect theory does in fact explain it more satisfactorily than does the theory of rational choice. In addition, the analysis suggests that affect may sometimes play a role in causing decision frames to change and raises questions about Janis and Mann's account of the impact of stress on decision-making.