Content area
Full text
The work cited by the Nobel committee was done jointly with Amos Tversky (1937-1996) during a long and unusually close collaboration. Together, we explored the psychology of intuitive beliefs and choices and examined their bounded rationality. Herbert A. Simon (1955, 1979) had proposed much earlier that decision makers should be viewed as boundedly rational, and had offered a model in which utility maximization was replaced by satisficing. Our research attempted to obtain a map of bounded rationality, by exploring the systematic biases that separate the beliefs that people have and the choices they make from the optimal beliefs and choices assumed in rational-agent models. The rational-agent model was our starting point and the main source of our null hypotheses, but Tversky and i viewed our research primarily as a contribution to psychology, with a possible contribution to economics as a secondary benefit. We were drawn into the interdisciplinary conversation by economists who hoped that psychology could be a useful source of assumptions for economic theorizing, and indirectly a source of hypotheses for economic research (Richard H. Thaler, 1980, 1991, 1992). These hopes have been realized to some extent, giving rise to an active program of research by behavioral economists (Thaler, 2000; Colin Camerer et al., forthcoming; for other examples, see Kahneman and Tversky, 2000).
My work with Tversky comprised three separate programs of research, some aspects of which were carried out with other collaborators. The first explored the heuristics that people use and the biases to which they are prone in various tasks of judgment under uncertainty, including predictions and evaluations of evidence (Kahneman and Tversky, 1973; Tversky and Kahneman, 1974; Kahneman et al., 1982). The second was concerned with prospect theory, a model of choice under risk (Kahneman and Tversky, 1979; Tversky and Kahneman, 1992) and with loss aversion in riskless choice (Kahneman et al., 1990, 1991; Tversky and Kahneman, 1991). The third line of research dealt with framing effects and with their implications for rational-agent models (Tversky and Kahneman, 1981, 1986). The present essay revisits these three lines of research in light of recent advances in the psychology of intuitive judgment and choice. Many of the ideas presented here were anticipated informally decades ago, but the attempt to integrate them into a coherent...