Daniel Kahneman - Choices, Values, and Frames

This book presents a selection of the research that grew from the editors early collaboration on Prospect Theory, the landmark article that offered the first compelling alternative to the standard rational agent model of choice under risk. In the spirit of the highly influential volume Judgment Under Uncertainty, first published in 1982, this book collects numerous theoretical and empirical articles that have become classics, important extensions, and applications that range from principles of legal compensation to the behavior of New York cab drivers on busy days. Several surveys prepared especially for this volume illustrate the scope and vigor of the behavioral study of choice.

Theoretically elegant and empirically robust, the research collected in this volume represents an approach to the science of decision making that has influenced numerous fields of study, including decision theory, behavioral economics and behavioral finance, consumer psychology, the study of negotiation and conflict, medical decision making, legal analysis and practice, well-being studies, political science, and philosophical investigations of rationality and ethics. The book provides an accessible introduction to the study of decision-making behavior and is an indispensable reference source for students and specialists.

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Daniel Kahneman and the late Amos Tversky have started a new perspective on the traditional economic categories of choice, decision, and value. A series of experimental and empirical studies by them and others have rejected traditional assumptions of rationality. Even more importantly, these scholars have developed alternative generalizations with significant predictive power and have found empirical verification for them. This outstanding collection of studies will make these new results readily accessible.

Kenneth J. Arrow, Nobel Memorial Laureate in Economic Science, Stanford University

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Daniel Kahneman is Eugene Higgins Professor of Psychology and Professor of Public Affairs at the Woodrow Wilson School of Public Affairs, Princeton University.

The late Amos Tversky (19371996) was DavisBrack Professor of Behavioral Science at Stanford University.

Edited by

DANIEL KAHNEMAN

Princeton University

AMOS TVERSKY

Stanford University

Russell Sage Foundation

CAMBRIDGE UNIVERSITY PRESS

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Information on this title: www.cambridge.org/9780521621724

Cambridge University Press 2000

Russell Sage Foundation

This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press.

First published 2000

10th printing 2009

Printed in the United States of America

A catalog record for this publication is available from the British Library.

Library of Congress Cataloging in Publication Data

Choices, values, and frames / edited by Daniel Kahneman, Amos Tversky

p. cm.

ISBN 0-521-62172-0 ISBN 0-521-62749-4 (pbk.)

1. Decision making. 2. Uncertainty. 3. Risk-taking (Psychology). 4. Value.

I. Kahneman, Daniel, 1934. / II. Tversky, Amos.

HD30.23.C469 2000

658.403dc21 99-059883

ISBN 978-0-521-62172-4 hardback

ISBN 978-0-521-62749-8 paperback

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Daniel Kahneman and Amos Tversky

Daniel Kahneman and Amos Tversky

Amos Tversky and Daniel Kahneman

Draen Prelec

Amos Tversky and Craig R. Fox

Craig R. Fox and Amos Tversky

Amos Tversky and Daniel Kahneman

Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler

Jack L. Knetsch

Ian Bateman, Alistair Munro, Bruce Rhodes, Chris Starmer, and Robert Sugden

Matthew Rabin

Amos Tversky and Daniel Kahneman

Eric J. Johnson, John Hershey, Jacqueline Meszaros, and Howard Kunreuther

Richard H. Thaler

Richard H. Thaler

Colin F. Camerer

Shlomo Benartzi and Richard H. Thaler

Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler

Eldar Shafir, Peter Diamond, and Amos Tversky

Colin F. Camerer, Linda Babcock, George Loewenstein, and Richard H. Thaler

Terrance Odean

Daniel Kahneman and Dan Lovallo

Colin F. Camerer and Dan Lovallo

David Cohen and Jack L. Knetsch

George A. Quattrone and Amos Tversky

Daniel Kahneman and Amos Tversky

Paul Slovic

Amos Tversky, Shmuel Sattath, and Paul Slovic

Amos Tversky and Itamar Simonson

Craig R. Fox and Amos Tversky

Christopher K. Hsee

George F. Loewenstein and Draen Prelec

George Loewenstein and Draen Prelec

Eldar Shafir, Itamar Simonson, and Amos Tversky

Baruch Fischhoff

Daniel Kahneman, Ilana Ritov, and David Schkade

Daniel Kahneman

Daniel Kahneman

Amos Tversky and Dale Griffin

George Loewenstein and Daniel Adler

Itamar Simonson

Daniel Kahneman

This preface is not the one that Amos Tversky and I intended to write. Soon after Amos learned early in 1996 that he only had a few months to live, we decided to edit a joint book on decision making that would collect much of our work on this topic and congenial research by others. The collection was to be a sequel and companion to a volume on heuristics and biases of judgment that we had edited together with Paul Slovic many years earlier, and a substitute for a book that Amos and I had promised the Russell Sage Foundation.

Most of the editorial task was completed quickly, although some new pieces that Amos wanted to include notably one that I was to write were only completed long after he was gone. The problem of writing a preface was more difficult than finding articles we liked. Our initial aspirations for the preface were high; we were going to write a broad essay presenting a view of how the field had changed in the preceding 20 years. But we ran out of time before we had a presentable product. Amos advised me to trust the model of me that is in your mind and write for both of us. This was not advice that I was able to follow: the risk of writing in his name statements that he might have rejected proved intimidating to the point of paralysis. I chose to take the smaller risk of writing on my own and in a more personal vein than we would have adopted if we had written jointly. My intent is to provide a perspective on some dominant themes of this book by tracing them to the years that we spent working closely together on the problem of choice.