Given the considerable sovereignty costs involved, the adoption of
modern investment treaties by practically all developing countries
presents somewhat of a puzzle. Based on a review of leading
explanations of investment treaty diffusion, the article advances a new
theory using behavioral economics insights on cognitive heuristics. In
line with recent work on policy diffusion, it suggests that a bounded
rationality framework has considerable potential to explain why, and
how, developing countries have adopted modern investment treaties.
To illustrate the potential of this approach, the case of South Africa is
studied in depth
