Daniel A. Kahneman’s research while affiliated with Princeton University and other places

What is this page?


This page lists works of an author who doesn't have a ResearchGate profile or hasn't added the works to their profile yet. It is automatically generated from public (personal) data to further our legitimate goal of comprehensive and accurate scientific recordkeeping. If you are this author and want this page removed, please let us know.

Publications (1)


Prospect Theory: An Analysis of Decision Under Risk
  • Article

February 1979

·

6,995 Reads

·

50,898 Citations

Econometrica

Daniel A. Kahneman

·

Amos N. Tversky

Analysis of decision making under risk has been dominated by expected utility theory, which generally accounts for people's actions. Presents a critique of expected utility theory as a descriptive model of decision making under risk, and argues that common forms of utility theory are not adequate, and proposes an alternative theory of choice under risk called prospect theory. In expected utility theory, utilities of outcomes are weighted by their probabilities. Considers results of responses to various hypothetical decision situations under risk and shows results that violate the tenets of expected utility theory. People overweight outcomes considered certain, relative to outcomes that are merely probable, a situation called the "certainty effect." This effect contributes to risk aversion in choices involving sure gains, and to risk seeking in choices involving sure losses. In choices where gains are replaced by losses, the pattern is called the "reflection effect." People discard components shared by all prospects under consideration, a tendency called the "isolation effect." Also shows that in choice situations, preferences may be altered by different representations of probabilities. Develops an alternative theory of individual decision making under risk, called prospect theory, developed for simple prospects with monetary outcomes and stated probabilities, in which value is given to gains and losses (i.e., changes in wealth or welfare) rather than to final assets, and probabilities are replaced by decision weights. The theory has two phases. The editing phase organizes and reformulates the options to simplify later evaluation and choice. The edited prospects are evaluated and the highest value prospect chosen. Discusses and models this theory, and offers directions for extending prospect theory are offered. (TNM)

Citations (1)


... Finally, in line with previous Australian studies (Nguyen & Mitrou, 2024c, 2024a, 2024d, we include variables related to weather-related home damage, home and content insurance, overall life satisfaction, and satisfaction concerning personal safety and health to capture potential psychological stress. 30 These variables are included due to their close association with risk preferences, which, similar to psychological stress, may have influenced the demand for PHI (Kahneman and Tversky, 1979;Schildberg-Hörisch, 2018). ...

Reference:

Natural disasters and the demand for health insurance
Prospect Theory: An Analysis of Decision Under Risk
  • Citing Article
  • February 1979

Econometrica