More than 33 years ago, Daniel Kahneman and Amos Tversky, two Israeli psychologists, published their celebrated paper, “Prospect Theory: An Analysis of Decision under Risk,” in the journal Econometrica. In this seminal paper, Kahneman and Tversky explained that people make decisions based on gains and losses arising out of a choice instead of final wealth levels. Since then, the major concepts of prospect theory have been accepted by social scientists as the best available theoretical tools for analysing real-life decision making under risk. Kahneman Book_reviwe-artwork1-Vol10Issue4_1was awarded the 2002 Nobel Memorial Prize in Economic Sciences for his work in prospect theory.
Daniel Kahneman brings his lifelong research on cognitive bias, prospect theory and happiness together in “Thinking, Fast and Slow” in which he explores several predictable errors in human judgement. He sets the tone early: “So this is my aim ... improve the ability to identify and understand errors of judgment and choice, in others and eventually in ourselves, by providing a richer and more precise language to discuss them.”