Daniel Kahneman

Daniel Kahneman was an Israeli-American psychologist whose research with Amos Tversky reshaped the study of judgment, decision-making, and behavioral economics. He received the 2002 Nobel Memorial Prize in Economic Sciences.

Amos Tversky: Amos Tversky was an Israeli cognitive psychologist who studied judgment and decision-making with Daniel Kahneman. Their partnership produced the prospect theory and heuristics research most associated with Kahneman.
Prospect theory: Prospect theory describes how people evaluate risky options relative to a reference point, with losses weighing more than equivalent gains. Kahneman and Tversky developed it to explain choices that expected utility theory could not predict.
Behavioral economics: Behavioral economics studies how psychological factors shape economic decisions and outcomes. Kahneman’s research helped bring psychological evidence into economic theories of choice.
Nobel Memorial Prize in Economic Sciences: The Nobel Memorial Prize in Economic Sciences is an annual award established by Sweden’s central bank in memory of Alfred Nobel. Kahneman received the 2002 prize for integrating psychological research into economic science.
Cognitive psychology: Cognitive psychology studies mental processes such as perception, memory, reasoning, and language. Kahneman’s research applied cognitive psychology to judgments and choices.
Framing effect: The framing effect is a change in judgment or choice caused by how equivalent options are described. Kahneman’s experiments showed that descriptions of gains and losses can reverse preferences.
Nudge theory: Nudge theory studies how choice environments can influence behavior without banning options or substantially changing incentives. Kahneman’s findings on judgment informed later efforts to design choices around human tendencies.
Behavioral finance: Behavioral finance studies how psychological influences and biases affect financial markets and investor decisions. Kahneman’s findings helped motivate challenges to models of fully rational investors.
Heuristic: A heuristic is a mental shortcut used to make judgments or solve problems efficiently. Kahneman and Tversky showed how shortcuts can produce systematic errors in judgment.
Loss aversion: Loss aversion is the tendency for losses to have greater psychological impact than equivalent gains. It is a central feature of prospect theory and helps explain resistance to change.

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