Economics & Decision · 1979
Prospect Theory: An Analysis of Decision under Risk
Daniel Kahneman, Amos Tversky
Overview
Kahneman and Tversky showed that people systematically violate the 'rational' model of decision-making. Their prospect theory describes how we actually weigh gains, losses, and probabilities — laying the foundation for behavioural economics.
Founded behavioural economics; won the 2002 Nobel Memorial Prize in Economics.
Key findings
Methods
A series of survey experiments presenting participants with hypothetical gambles revealed consistent, predictable deviations from expected-utility theory, which were formalised into a descriptive value-and-weighting model.
Keywords
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