Amos Tversky's research while affiliated with Stanford University and other places

Publications (232)

Chapter
This book presents the definitive exposition of ‘prospect theory’, a compelling alternative to the classical utility theory of choice. Building on the 1982 volume, Judgement Under Uncertainty, this book brings together seminal papers on prospect theory from economists, decision theorists, and psychologists, including the work of the late Amos Tvers...
Chapter
Expected utility theory reigned for several decades as the dominant normative and descriptive model of decision making under uncertainty, but it has come under serious question in recent years. There is now general agreement that the theory does not provide an adequate description of individual choice: a substantial body of evidence shows that deci...
Article
This article presents a criticism of the theory of expected utility as a descriptive model of decision making under risk, and presents the prospective theory as an alternative model. The choices between risky alternatives show several general effects that are not consistent with the principal of the theory of utility. The certainty effect, for inst...
Article
STRESZCZENIE: Teoria perspektywy D. Kahnemana i A. Tversky'ego zakłada, że ludzie są bardziej skłonni do podejmowania ryzyka dzia-łając w sferze strat, niż w sferze zysków. Zgodnie z tym założeniem funkcja wartości ma wypukły przebieg w sferze zysków, natomiast wklęsły w sferze strat. Te założenia poddano weryfikacji w bada-niach dotyczących podejm...
Article
You're in a world all your own. It's hard to describe. But the basket seems to be so wide. No matter what you do, you know the ball is going to go in. —Purvis Short, of the NBA's Golden State Warriors This statement describes a phenomenon known to everyone who plays or watches the game of basketball, a phenomenon known as the “hot hand.” The term r...
Article
Normative and descriptive theories of choice assume that absolute attribute values are key determinants of preferences. Building on research on the compromise effect, we propose that absolute attribute values often play a relatively minor role in the construction of preferences and consumers rely primarily on the relative positions of product alter...
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Full-text available
We develop a belief-based account of decision under uncertainty. This model predicts decisions under uncertainty from (i) judgments of probability, which are assumed to satisfy support theory; and (ii) decisions under risk, which are assumed to satisfy prospect theory. In two experiments, subjects evaluated uncertain prospects and assessed the prob...
Article
Probabilistic insurance is an insurance policy involving a small probability that the consumer will not be reimbursed. Survey data suggest that people dislike probabilistic insurance and demand more than a 20% reduction in the premium to compensate for a 1% default risk. While these preferences are intuitively appealing they are difficult to reconc...
Article
Research has shown that the judged probability of an event depends on the specificity with which the focal and alternative hypotheses are described. In particular, unpacking the components of the focal hypothesis generally increases the judged probability of the focal hypothesis, while unpacking the components of the alternative hypothesis decrease...
Article
Support theory represents probability judgment in terms of the support, or strength of evidence, of the focal relative to the alternative hypothesis. It assumes that the judged probability of an event generally increases when its description is unpacked into disjoint components (implicit subadditivity). This article presents a significant extension...
Article
Myopic loss aversion is the combination of a greater sensitivity to losses than to gains and a tendency to evaluate outcomes frequently. Two implications of myopic loss aversion are tested experimentally. 1. Investors who display myopic loss aversion will be more willing to accept risks if they evaluate their investments less often. 2. If all payof...
Article
Full-text available
Probabilistic insurance is an insurance policy involving a small probability that the consumer will not be reimbursed. Survey data suggest that people dislike probabilistic insurance and demand more than a 20% reduction in the premium to compensate for a 1% default risk. While these preferences are intuitively appealing they are difficult to reconc...
Article
The term 'money illusion' refers to a tendency to think in terms of nominal rather than real monetary values. Money illusion has significant implications for economic theory, yet it implies a lack of rationality that is alien to economists. This paper reviews survey questions regarding people's reactions to variations in inflation and prices, desig...
Article
The study of heuristics and biases in judgement has been criticized in several publications by G. Gigerenzer, who argues that "biases are not biases" and "heuristics are meant to explain what does not exist" (1991, p. 102). The article responds to Gigerenzer's critique and shows that it misrepresents the authors' theoretical position and ignores cr...
Article
We examine the confidence and accuracy with which people make personality trait inferences and investigate some consequences of the hypothesis that such judgments are based on similarity or conceptual relatedness. Given information concerning a target person's standing on three global personality dimensions, American and Israeli subjects were asked...
Article
Classical theories of choice associate with each option a unique value such that, given an offered set, the decision maker chooses the option of highest value. An immediate consequence is context-independence: the relative ranking of any two options should not vary with the presence or absence of other options. Five experiments reveal two systemati...
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There is a widespread and strongly held belief that arthritis pain is influenced by the weather; however, scientific studies have found no consistent association. We hypothesize that this belief results, in part at least, from people's tendency to perceive patterns where none exist. We studied patients (n = 18) for more than I year and found no sta...
Article
We examine predictions and judgments of confidence based on one-sided evidence. Some subjects saw arguments for only one side of a legal dispute while other subjects (called 'jurors') saw arguments for both sides. Subjects predicted the number of jurors who favored the plaintiff in each case. Subjects who saw only one side made predictions that wer...
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Full-text available
Professional options traders priced risky prospects as well as uncertain prospects whose outcomes depended on future values of various stocks. The prices of the risky prospects coincided with their expected value, but the prices of the uncertain prospects violated expected utility theory. An event had greater impact on prices when it turned an impo...
Article
The overconfidence observed in calibration studies has recently been questioned on both psychological and methodological grounds. In the first part of the article we discuss these issues and argue that overconfidence cannot be explained as a selection bias, and that it is not eliminated by random sampling of questions. In the second part of the art...
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Full-text available
We investigate the behavior of players in a two-person competitive game. One player “hides” a treasure in one of four locations, and the other player “seeks” the treasure in one of these locations. The seeker wins if her choice matches the hider’s choice; the hider wins if it does not. According to the classical game-theoretic analysis, both player...
Article
Full-text available
Research in cognitive psychology has indicated that alternative descriptions of the same event can give rise to different probability judgments. This observation has led to the development of a descriptive account, called support theory, which assumes that the judged probability of an explicit description of an event (that lists specific possibilit...
Article
Decision theory distinguishes between risky prospects, where the probabilities associated with the possible outcomes are assumed to be known, and uncertain prospects, where these probabilities are not assumed to be known. Studies of choice between risky prospects have suggested a nonlinear transformation of the probability scale that overweights lo...
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To accommodate the observed pattern of risk-aversion and risk-seeking, as well as common violations of expected utility (e.g., the certainty effect), the authors introduce and characterize a weighting function according to which an event has greater impact when it turns impossibility into possibility, or possibility into certainty, than when it mer...
Article
Decisions under uncertainty depend not only on the degree of uncertainty but also on its source, as illustrated by Daniel Ellsberg's (1961) observation of ambiguity aversion. In this article, the authors propose the comparative ignorance hypothesis, according to which ambiguity aversion is produced by a comparison with less ambiguous events or with...
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Full-text available
Presents a new theory of subjective probability according to which different descriptions of the same event can give rise to different judgments. The experimental evidence confirms the major predictions of the theory. First, judged probability increases by unpacking the focal hypothesis and decreases by unpacking the alternative hypothesis. Second,...
Article
There is a growing body of evidence that people's choices between risky and riskless options depend on the framing of the problem and the context of choice, contrary to the assumptions of description invariance and context independence that underlie rational decision theories. This article reviews these phenomena and discusses their implications. T...
Conference Paper
Judgment under Uncertainty: Heuristics and Biases Many decisions are based on beliefs concerning the likelihood of un-certain events such as the outcome of an election, the guilt of a defen-dant, or the future value of the dollar. uncertain events are expressed in numerical form as odds or subjective probabilities. What determines such beliefs? How...
Article
This paper considers the role of reasons and arguments in the making of decisions. It is proposed that, when faced with the need to choose, decision makers often seek and construct reasons in order to resolve the conflict and justify their choice, to themselves and to others. Experiments that explore and manipulate the role of reasons are reviewed,...
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Full-text available
The common usage of personality trait terms in the language includes an implicit quantification that is part of the accepted meaning of the term. This aspect of a trait's meaning is here called its scope. Traits with high scope, such as honest, require a high relative frequency of behavioral manifestation before they are attributed. In contrast, lo...
Article
The standard theory of choice---based on value maximization---associates with each option a real value such that, given an offered set, the decision maker chooses the option with the highest value. Despite its simplicity and intuitive appeal, there is a growing body of data that is inconsistent with this theory. In particular, the relative attracti...
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Full-text available
Judgments of probability are commonly evaluated by 2 criteria: (1) calibration, namely, the correspondence between stated confidence and rate of occurrence, and (2) resolution, namely, the ability to distinguish between events that do and do not occur. Two representations of probability judgments are contrasted: the designated form that presupposes...
Article
This paper presents a method for axiomatizing a variety of models for decision making under uncertainty, including Expected Utility and Cumulative Prospect Theory. This method identifies, for each model, the situations that permit consistent inferences about the ordering of value differences. Examples of rank-dependent and sign-dependent preference...
Article
Choice often produces conflict. This notion, however, plays no role in classical decision theory, in which each alternative is assigned a value, and the decision maker selects from every choice set the option with the highest value. We contrast this principle of value maximization with the hypothesis that the option to delay choice or seek new alte...
Article
When thinking under uncertainty, people often do not consider appropriately each of the relevant branches of a decision tree, as required by consequentialism. As a result they sometimes violate Savage's sure-thing principle. In the Prisoner's Dilemma game, for example, many subjects compete when they know that the opponent has competed and when the...
Article
One of the basic axioms of the rational theory of decision under uncertainty is Savage's (1954) sure-thing principle (STP). It states that if prospect x is preferred to y knowing that Event A occurred, and if x is preferred to y knowing that A did not occur, then x should be preferred to y even when it is not known whether A occurred. We present ex...
Article
Consumer choice is often influenced by the context, defined by the set of alternatives under consideration. Two hypotheses about the effect of context on choice are proposed. The first hypothesis, tradeoff contrast, states that the tendency to prefer an alternative is enhanced or hindered depending on whether the tradeoffs within the set under cons...
Article
Consumer choice is often influenced by the context, defined by the set of alternatives under consideration. Two hypotheses about the effect of context on choice are proposed. The first hypothesis, tradeoff contrast, states that the tendency to prefer an alternative is enhanced or hindered depending on whether the tradeoffs within the set under cons...
Article
The pattern of overconfidence and underconfidence observed in studies of intuitive judgment is explained by the hypothesis that people focus on the strength or extremeness of the available evidence (e.g., the warmth of a letter or the size of an effect) with insufficient regard for its weight or credence (e.g., the credibility of the writer or the...
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We investigated decisions involving multiple independent uncertain prospects. At the extremes, a decision maker may either consider each prospect as a separate event (segregation) or evaluate the overall distribution of outcomes (aggregation). Contrary to choice by segregation, people sometimes reject a single gamble but accept a repeated play. On...
Article
We develop a new version of prospect theory that employs cumulative rather than separable decision weights and extends the theory in several respects. This version, called cumulative prospect theory, applies to uncertain as well as to risky prospects with any number of outcomes, and it allows different weighting functions for gains and for losses....
Article
Much experimental evidence indicates that choice depends on the status quo or reference level: changes of reference point often lead to reversals of preference. The authors present a reference-dependent theory of consumer choice, which explains such effects by a deformation of indifference curves about the reference point. The central assumption of...
Article
We investigate the relation between judgments of probability and preferences between bets. A series of experiments provides support for the competence hypothesis that people prefer betting on their own judgment over an equiprobable chance event when they consider themselves knowledgeable, but not otherwise. They even pay a significant premium to be...
Chapter
The mathematical analysis of the form of measurement axioms requires some specific methods. The mathematical concepts are drawn from mathematical logic and are relatively special compared with the mathematical ideas. Axiomatization is an activity that is sometimes found in mathematics and science, but not always. Its origins are ancient, and it is...
Chapter
Most work in the theory of measurement has been based on additive representations for various kinds of structures. There are good reasons for studying the structures in which the numerical combination rules are intrinsically nonadditive. This chapter discusses nonadditivity in its various guises. The approach to nonadditivity is pursued in the chap...
Chapter
This chapter describes the attempts to deal with the classes of real transformation groups that can arise in measurement and the types of structure that give rise to representations with specified transformation groups. Although the general concepts of M-point homogeneity and N-point uniqueness apply to conjoint structures, they are not sufficientl...
Chapter
Certain numerical statements involving measurement representations are meaningless in the sense that their truth value is dependent on which particular representation or representations are being employed. The subject of meaningfulness has two major controversies. First, how to capture the idea of definability of relations; and the second centers o...
Article
The present report summarizes two projects. The first project, which focuses on riskless choice, involves a series of experiments that demonstrate the phenomenon of loss aversion: losses and disadvantages have greater impact on preference than gains and advantages. the evidence shows that choice depends on the status quo or reference level, and tha...
Article
Tension between health policy and medical practice exists in many situations. For example, regional variations in practice patterns persist despite extensive shared information,1 2 3 there are substantial deviations from accepted guidelines daily in the care of patients,4 5 6 7 and disproportionate amounts of care are given to selected individuals....
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Full-text available
We investigated possible explanations of the finding that the relative weight (W) of common components in similarity judgments is higher for verbal than for pictorial stimuli. A serial presentation of stimulus components had no effect on verbal stimuli; it increased the impact of both common and distinctive components of pictorial stimuli but did n...
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G. Keren's (see record 1990-27344-001) alternative interpretation is refuted by the data in Table 14 of I. Ritov et al's (see record 1990-27355-001) article on differential weighting of common and distinctive components. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
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We note that Keren’s alternative interpretation of our findings is refuted by the data summarized in Table 14 of our original article.
Article
G. Keren's (see record 1990-27344-001) alternative interpretation is refuted by the data in Table 14 of I. Ritov et al's (see record 1990-27355-001) article on differential weighting of common and distinctive components.
Article
Full-text available
The preference reversal phenomenon has been established in numerous studies during the last two decades, but its causes have only recently been uncovered. This phenomenon, or cluster of phenomena, challenges the traditional assumption that the decisionmaker has a fixed preference order that is captured accurately by any reliable elicitation procedu...
Article
Observed preference reversal cannot be adequately explained by violations of independence, the reduction axiom, or transitivity. The primary cause of preference reversal is the failure of procedure invariance, especially the overpricing of low-probability, high-payoff bets. This result violates regret theory and generalized (nonindependent) utility...
Article
A constructive approach to the analysis of judgement and choice maintains that the decision maker does not always have well-define preferences and beliefs. Instead, they are often constructed in the elicitation process. This approach is used to explain and interpret a variety of phenomena that violate the classical theory of rational choice. It als...
Article
As in Volume I, we attempt to address two audiences with different levels of interest and mathematical facility. We hope that a reader interested in the main ideas and results can understand them without having to read proofs, which are usually placed in separate sections. The proofs themselves are given somewhat more fully than would be appropriat...
Chapter
This chapter discusses homomorphisms that map a set of infinite-dimensional vectors into a low-dimensional vector space. For both color and force, the usual vector representations are three-dimensional. The infinite-dimensional objects can be thought of as input functions to an operator. The reduction to low dimensionality is based on an equivalenc...
Chapter
This chapter discusses representation of choice probabilities. Axiomatic theories of measurement are generally based on an order relation. In the analysis of choices, the idea of an ordering is naturally linked to the concept of maximization: the decision maker selects the option that is maximal relative to the constraints. The concept of maximizat...

Citations

... Dans la plupart des cas, les discours des jeunes oscillent entre une rhétorique du retour en formation « subi » ou « choisi » sans se placer entièrement dans l'un des deux. Cette volonté de retour se fait face à une grande incertitude sur son avenir (Shafir & Tversky, 2003). ...
... There is reason to assume that likelihood as a form of psychological distance is particularly elusive to study. People are generally poor at dealing with probabilities and make erroneous judgments of likelihood in a variety of situations (Tversky & Kahneman, 2002). Therefore, it could be difficult to successfully manipulate subjective likelihood, making experimental manipulations such as those typically employed in CLT studies (e.g., 5 vs. 95% chance of performing a task) ineffective in changing people's perception of psychological distance. ...
... " approach to decision making is similar to the so-called " crystal ball " technique and the " prospective hindsight " approach found by various researchers to significantly decrease overconfidence in a focal hypothesis (e.g., Mitchell, Russo, & Pennington, 1989; Koriat, Lichtenstein, & Fischoff, 1980; Veinott, Klein, & Wiggins, 2010). On the other hand, it is possible that such a radical change in procedure could conceivably lead in some cases to underconfidence in the focal hypothesis (Griffin & Tversky, 2002 ), causing planners to assign probabilities to the designated search area that are too low. This could lead to an equally decremental impact on the overall search plan, causing the searchers to abandon the original search area much too soon. ...
... Relatedly, the behavior prediction literature also reveals that information about an individual's abilities, characteristics, and past achievements can also influence forecasts of their future outcomes (Burns & Corpus, 2004;Camerer, 1989;Heyman & Gelman, 1998;Rholes & Ruble, 1984;Skowronski & Carlston, 1987;Vallone & Tversky, 1985); thus, it is possible that such information may further moderate the impact of the intent-to-outcome lay belief on observers' forecasts. Of note, the current research finds that the intent-to-outcome lay belief continues to guide forecasts when forecasters are aware of some relevant historical performance information (e.g., the number of times a contestant has won similar prior competitions; Studies 1B-1C), as well as when forecasters are aware of a contestant's social category membership (e.g., membership in social categories demarcated by race, age, gender, and disability status). ...
... In terms of collusion prevention, Zhang [14] analyzed the possibility of collusion based on the project properties, market environment, collusion costs, and collusion benefits, and also constructed a three-party game model, which showed that reducing regulatory costs, improving regulatory tools, increasing penalties, and benefits for participants can strongly curb collusion; Cavill and Cavill [15] pointed out that strengthening the accountability of the stakeholders involved in bidding, improving their respective responsibilities, and efficiently fulfilling their obligations have important effects on preventing the collusion; Rahman et al. [16] emphasized the importance of maintaining information symmetry, guaranteeing information security, and preserving data privacy in the process of against collusion, and proposed the signing of privacy bid agreement as a governance measure; Boone and Mulherin [17] and Ishiguro [18] indicated that the fundamental way to eliminate the occurrence of collusion in bidding was to establish a bidding supervisory body and gave full play to the regulatory role of the acting government, and handled timely for supervision efficiency; Howlader et al. [19] detected vertical collusion in bidding by constructing an SNA network model of individuals, organizations, communities and other participants and achieved good results; Van Den Heuvel [20] deterred bidding stakeholders' willingness to collude by feature analysis of vertical collusion in bidding and trace to the master and follower of bidding combined with genetic algorithm. Scholars also considered the psychology of participants [21] and the probability density function of auction price [22], etc. on collusion prevention. ...
... On the other hand, emotion-reliant individuals are often influenced by experiencing strong emotions that either activate or deactivate behaviours (Petri & Govern, 2013), which in turn impact on how they react to decision-making situations. The strengthening of judgments of the possibility of preferential outcomes has an emotional impact on us and 'this amplification may reflect on our affective responses to positive and negative outcomes' (Tversky & Fox, 2000). Therefore, emotion-reliant individuals may seek a solution that feels right, above a solution that fits a specific set of guidelines, yet feels uncomfortable. ...
... Zuo et al. (2021) studied the relationship between perceived social support and despair in the context of the COVID-19 epidemic and concluded that, compared with other provinces, residents in Wuhan or more distant areas in Hubei province had less social support than those between the two regions. Endowment and contrast effects can be used to explain the MZE (Xie et al., 2011a), where the former refers to the negative or positive factors the event that directly affect the current emotional trend of a person, and the latter indicates that past events will affect people's evaluation of current events (Tversky and Griffin, 1991;Wen et al., 2020). ...