Truth in a Post-Truth Society: How Sticky Defaults, Status Quo Bias and the Sovereign Prerogative Influence the Perceived Legitimacy of International Arbitration

Abstract

Events over the last year have generated significant questions about how democratic discourse can proceed in a post-truth society where empirical evidence has little persuasive value. Justice Brandeis once famously claimed that the best way to combat pervasive falsehoods and political misperceptions was through “more speech,” but that strategy is built on the assumption that errors arise out of information deficits. As contemporary debate shows, the Brandesian response is ill-suited to a world increasingly built on “alternative facts.” Fortunately, interdisciplinary research not only explains why existing methods of persuasion fail, it also describes how to combat the problems associated with the modern legal and political climate.

This Article considers the problem of pervasive political misconceptions through the lens of the ongoing debate about the legitimacy of international arbitration. Numerous empirical studies prove that international arbitration (meaning both international commercial (business-to-business) and investment (investor-state) arbitration) offers a fair and unbiased means of resolving complex, high-value legal disputes through sophisticated, highly formal procedures that more closely resemble judicial procedures in commercial courts than domestic arbitration. However, critics routinely ignore this data and continue to question the validity of the procedure. Why?

This Article draws on empirical and theoretical studies conducted by political scientists, philosophers, psychologists and economists to demonstrate how three phenomenon – sticky defaults, status quo bias and the sovereign prerogative – work in tandem to create enduring but demonstrably incorrect perceptions about the legitimacy of international arbitration. Interdisciplinary research also provides a potential solution in the form of a heuristic known as the Reversal Test, which acts as an objective diagnostic tool to identify the influence of unconscious cognitive distortions such as the status quo bias. Through this analysis, this Article not only addresses one of the core paradoxes in international dispute resolution but also provides intriguing insights into policy debates in other fields.

Keywords: legitimacy, international commercial arbitration, international investment arbitration, litigation, dispute resolution, courts, interdisciplinary, law and economics, psychology, political science, philosophy, unconscious bias, status quo bias, defaults, slippery defaults, sovereign prerogative, post