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Vol 23 No 2 Feb/March 2018

Book of the Month

Cover of The UK Supreme Court Yearbook Volume 8: 2016-2017 Legal Year

The UK Supreme Court Yearbook Volume 8: 2016-2017 Legal Year

Edited by: Daniel Clarry
Price: £120.00

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Bounded Rationality and Economic Diplomacy: The Politics of Investment Treaties in Developing Countries

ISBN13: 9781107552012
Published: June 2017
Publisher: Cambridge University Press
Country of Publication: UK
Format: Paperback
Price: £24.99

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Modern investment treaties give private arbitrators power to determine whether governments should pay compensation to foreign investors for a wide range of sovereign acts. In recent years, particularly developing countries have incurred significant liabilities from investment treaty arbitration, which begs the question why they signed the treaties in the first place.

Through a comprehensive and timely analysis, this book shows that governments in developing countries typically overestimated the economic benefits of investment treaties and practically ignored their risks. Rooted in insights on bounded rationality from behavioural psychology and economics, the analysis highlights how policy-makers often relied on inferential shortcuts when assessing the implications of the treaties, which resulted in systematic deviations from fully rational behaviour.

This not only sheds new light on one of the most controversial legal regimes underwriting economic globalization but also provides a novel theoretical account of the often irrational, yet predictable, nature of economic diplomacy.

International Investment Law
Preface: the curious case of Pakistan
1. Unanticipated consequences
2. Bounded rationality and the spread of investment treaties
3. A difficult beginning
4. Promoting investment treaties
5. A less then rational competition
6. Narcissistic learning
7. Letting down the guard: a case study
8. Expanding the bounds of rationality in the investment regime.