Navigating shifts in power : prospect theory and the evolution of US relations with China and Japan

Why does a hegemon abruptly transition its stance toward certain powers from cooperation to confrontation? Using the example of U.S.-China and U.S.-Japan relations, I argue that, for a hegemon, changing state dispositions are not predominantly about military strength, ideology, nor adherence to global norms. Instead, drawing upon prospect theory, I suggest an economic and behavioral reasoning. I argue the United States’ contradictory actions are better understood as decisions made following transitions from a “domain of gain” to a “domain of loss,” spurred by economic disruptions to the status quo. To test this assertion, I use the synthetic control method to simulate a counterfactual path for China and Japan – their expected outcome had they never reached key economic thresholds. I find that the 35 to 40 percent range of proportional GDP relative to the United States coincides with a significant increase in negative sentiment, across different measures. This suggests there are important psychological considerations influencing state behavior, factors which traditional theories of international relations overlook.Arts, Faculty ofPolitical Science, Department ofGraduat