Guest Post: Behavioral International Law and Economics: Benchmark and Applications
[Prof. Dr. Anne van Aaken is Professor of Law and Economics, Legal Theory, Public International Law and European Law at the University of Sankt Gallen, Switzerland.]
I am delighted that Tomer Broude commented on Opinio Juris on the potential and the pitfalls of the use of behavioral economics in international law and am equally happy that I am able to follow up on this. I will do so in two steps: the first part will address the benchmark against which Behavioral International Law and Economics (BIntLE) should be measured in my view. The second mentions some of the applications I suggest in my paper and in an earlier article. Tomer and I are currently planning a book together, bringing together the insights of both of our papers and extending them considerably.
In his introduction to the topic, Tomer comments on the relationship of “Behavioral International Law” to rational choice approaches in international law and international relations.
Behavioral Economics is an empirically validated theory about human behavior. There are of course competing theories in social science. The psychological research is not free-floating and it is not used as such in the field of international law and international relations. Tomer suggests as a basis from which to depart sociological approaches. Sociology as such does not have a unified behavioral model, thus one would need to clarify which sociological theories are drawn upon (e.g. the homo sociologicus as advanced by Ralf Dahrendorf (micro theory of individual behavior), system theory (macro theory), etc.). I suggest as a benchmark rational choice theory, for two reasons. First, the psychological insights we use are commonly named behavioral economics, given that this research tests and challenges the rational choice hypothesis to a hitherto unknown extent (and the psychologist Daniel Kahneman won the Nobel prize in economics). But behavioral economics is not yet at a stage where it has a unified behavioral theory replacing rational choice: many heuristics and biases depend on the decision-making context (those have to be studied carefully). Rational choice is still the benchmark against which the insights are measured. Second, the parsimony of rational choice makes it a natural starting point. Since behavioral research adds complexity (something which every academic should try to avoid if a simpler explanation is possible for answering a certain research question), it has to show that it generates better insights and is able to explain phenomena which cannot be explained drawing on the rational choice approach alone. To use a coin minted by Einstein: “Everything should be as simple as it can be, but not simpler.” A rational choice approach might sometimes be too simple. Tomer and I share the belief that behavioral economics is able to generate more and better insights to the functioning of international law and we share also the deliberations on the methodological problems this might generate. Because of the weight I put on parsimony, I shift the burden of proof on BintLE to show that it might generate better insights than a rational choice approach to international law. This has to be done step by step, analyzing different fields of general and special international law. After all, it will be the empirics which will validate (or not) the research hypotheses advanced by any theory: the proof of the pudding is in the eating.
Having said that, let me turn to some promising insights, adding to Tomer´s suggestions in his paper and his post. The most basic “choice architecture” (Sunstein/Thaler) of international law is given by the sources of law. Those can be all the classical three sources of law as in Art. 38 ICJ Statue, but one may also add soft-law, since this is used ever more by states (and other actors). Taking the insights of how default options frame decision-makers, or provide a “choice architecture”, we can look at sources of international law under the perspective of how they fit into the opt-in vs. opt-out scheme. Psychology tells us that actors stay with the default rule: it thus matters whether opt-in or opt-out is the default (status quo bias). Sources of law can be plotted on a spectrum of specific, written and individual opt-in (treaties) to less specific, unwritten and general consensus subject to opt-out (custom) to unwritten and generally binding not subject to opt-out (jus cogens). This spectrum can be even more refined, especially on treaties, if majority voting of treaties or a certain form of consensus or decision-making powers of International Organizations is taken into account. Acquiescence or inaction is often the norm in terms of state action, but different sources use acquiescence in very different ways by creating different default rules about the consequences of inaction. That may shed light on why different rules for different types of sources are needed in order to achieve different goals.
The default rule is also present in reservations and objections thereto. Galbraith finds that depending on how the reservation option is framed (as opt-in or opt-out), there are statistically significant differences in how states react. One may use this insight for objections to reservations and conjecture that the opt-in rule under Art. 20 (5) VCLT leads to far fewer objections especially in human rights treaties, where reciprocity (and its incentives) plays no role. Thus, BIntLE submits an additional argument for changing the default option of interpreting the omission of an objection as an implicit consent (opt-out rule) to an opt-in rule: either the omission could be interpreted as an objection (instead of consent) and/or a minority of states’ objections is enough to invalidate the reservation (reversed Art. 20 (2) CERD model). This would enhance the integrity of treaties and solve the problem of decentralized interpretation of Art. 19 (c) VCLT.
Another application concerns flexibility mechanisms in treaty drafting (especially for reciprocal treaties). Rational choice scholars often use economic contract theory for analyzing treaties. Since complete contracts are impossible to draft, economic contract theory finds that overly strict and inflexible contracts may impair the joint surplus of the contracting parties ex post because they do not accommodate unforeseen circumstances. A trade-off arises between flexibility and commitment. Behavioral research suggests a more nuanced view, arguing that contracts provide reference points for the parties’ relationship and therefore for their feelings of entitlement. Flexible contracts are even more permissible in regard to licit behavior and permit so-called shading (twisting) in ex post performance, while under rigid contracts much less shading can occur. Shading will occur if parties to the contract interpret ‘their’ reference point with a self-serving bias or deem contracts unfair. Although parties do not feel entitled to outcomes outside the contract, they may feel entitled to different outcomes within the contract. If a party does not get what it feels entitled to, it is aggrieved and shades by providing perfunctory rather than consummate performance, causing deadweight losses. Thus, whereas flexible contracts dominate rigid ones under rational choice assumptions, this is not necessarily the case with behavioral assumptions. This insight calls for fewer usage of indeterminate legal terms and instead more explicit flexibility mechanisms in treaties. Many more applications are thinkable (and in the process of being tackled) and hopefully there is more to come, also on this blog!
 I would like to thank Anthea Roberts for this thought.