Loss Aversion, Neo-imperial Frames and Territorial Expansion: Using Prospect Theory to Examine the Annexation of Crimea

Why did Russia’s authoritarian leader decide to annex Crimea? Why was Ukraine unable to resist the Russian aggression? This study relies on prospect theory to illuminate the decision-making in Moscow and Kyiv that led to the takeover of Crimea. First, I identify the turning points of the Euromaidan crisis preceding the annexation and trace how Putin’s assessment of the status quo shifted repeatedly between the domains of losses and gains. In the domain of losses, the Russian leader, influenced by a neo-imperial faction within the Presidential Administration, became more risk acceptant, annexed the peninsula, and escalated the hybrid warfare. Putin framed the intervention using nationalist themes, drawing on salient historical analogies from the past. Second, new documentary evidence such as the minutes of Ukraine’s National Defence and Security Council (NDSC) and participant testimonies reveals that the decision-makers in Kyiv could not mount an effective defence due to squabbles among coalition partners, the breakdown of the military chain of command in Crimea, the looming threat of a full-scale invasion from the East, and the inflated expectations regarding the West’s capacity to deter Russia’s aggression. Third, the article relies on prospect theory to explain why after Crimea’s annexation, Putin refrained from continuing the territorial expansion deeper into Ukraine, opting instead to back secessionism in Donbas. This account highlights the explanatory power of prospect theory compared to alternative frameworks, pointing out, at the same time, the need to incorporate causal mechanisms from competing theoretical traditions in studies of foreign policy decision-making.