Prospect Theory and the Problem of Strategy: Lessons from Sicily and Dien Bien Phu

"Thus, we arrive at the central question at the intersection of prospect theory and strategy. Is strategy a means of avoiding the behavior trap described by theory? In other words, does the absence of good strategy increase the chance of embarking on and continuing a flawed or failing military operation—even in the face of significant losses—or is good strategy a pathway for avoiding such traps altogether?

There is no shortage of incidents throughout history that demonstrate these behavioral dynamics in war. The challenge of balancing ends and means is a central component of all strategic action, yet strategists have often done so poorly and to disastrous effect. To briefly explore the strategic consequences of prospect theory in action, excellent examples include the Athenian’s Sicilian Expedition in the Peloponnesian War and the French experience in Vietnam at the Battle of Dien Bien Phu."