Bad versus good enough:bias and institutional choice

Why do decision-makers choose to create new international institutions, even though an existing institution appears to be both suitable and good enough? This article examines this puzzle. Existing literature suggests that a status quo bias leads decision-makers to view the creation of a new institution as the choice of last resort. Existing institutions will, therefore, be used or modified when they are suitable for a given cooperation problem and their past performance is good enough. Yet, as the case of the Kosovo Specialist Chambers and Specialist Prosecutor’s Office (KSC) suggests, decision-makers at times reject existing institutions that are suitable and good enough. We identify the phenomenon of rejection-led creation and explain why it occurs. We argue that negativity bias, which is a known principle of human cognition, can account for why leaders might reject an institution and create another in its place. Negativity bias manifests during processes of institutional choice as loss aversion and failure salience. Empirically, we illustrate how negativity bias led to the rejection of the European Union (EU) Rule of Law Mission in Kosovo and the subsequent establishment of the KSC. This article contributes to literature on institutional choice theory and behavioralism in International Relations.