Challenges of behavioral economics applied to international treaties and negotiations

The Economic Analysis of Law is used as a mechanism to make analysis of law, as it focuses on the individual’s action. In the neoclassical line it was viewed that people made perfect rational decisions, resulting in the maximization of their preferences and diminishing the costs of achieving those. However, it has been proven that not all the decisions are rational, as there are a number of factors that influences how someone will decide. The Behavioral Economic line of thinking studies how emotional, contextual and cognitive factors may influence the decision making process. For the Behavioral Economic, people have bounded rationality, and their preferences are not always stable, as they suffer from interactions of various factors. Because people have bounded rationality, it is not possible to analyze all the information available at all times, so people make use of heuristics. The heuristics are shortcuts to make a decision, but they may lead to biases, which are errors in the decision making process. International treaties are a result of international negotiation between representatives of States. In the negotiations is possible to apply Behavioral Economics, once the individuals negotiating suffer from bounded rationality. Not only the international negotiation face the different factors that influence people’s decision, but also have specific challenges – like lack of political will, cultural differences, among others. Therefore, the Behavioral Economic theory can be applied to understand these specific challenges in negotiation and consequently achieve a better result.