Prospect theory and the failure of American coercive diplomacy on North Korea

This project examines how prospect theory explains North Korea’s actions during the 2002-3 nuclear crisis and the resulting failure of American coercive diplomacy. It seeks to examine how prospect theory can be employed to understand the success/failure of coercive diplomacy strategies. Prospect theory is combined with P.V. Jakobsen’s coercive diplomacy framework to analyze the US coercive diplomacy policy and North Korea’s response. This research concludes that North Korea’s bias toward the pre-crisis status quo and desire to salvage perceived losses propelled it to engage in provocative actions, which represented the failure of American coercive diplomacy. This project deduces that, first, in order to coerce the adversary away from its preferred status quo, the inducements must be larger than the punishments. And, second, coercive diplomacy must be framed in such a way that it is not viewed as an overall loss by the coerced state.