In Memoriam: Daniel Kahneman

Daniel Kahneman, who died at age 90 in March, immensely influenced the field of decision science. By uprooting conventional assumptions, he entirely changed how we approach many problems. Kahneman won the 2002 Nobel Prize in economics “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty.” With Amos Tversky, he developed Prospect Theory as an alternative to traditional economic theory, demonstrating that it better accounts for how people actually behave. He found that people typically rely on simple heuristics and biases in their decision making, often leading to decisions that act against their own self-interest. For example, he found that people care more about avoiding loses than about achieving gains. This means that changes are valued based on the direction of the difference from a reference point, rather than the absolute value.

Kahneman’s most influential book was arguably “Thinking, Fast and Slow.” He used a friendly and accessible writing style, relying on stories and vignettes to make important points. The book describes two ways in which the mind operates: fast and intuitive (System One), or slow and analytical (System Two). Both modes are necessary to navigate life. However, reliance on System One can lead to poor decisions if System Two is not activated appropriately.

Learn more: Visit Remembering Daniel Kahneman
Learn more: Watch videos describing some of Kahneman’s work
Learn more: Read the book, Thinking, Fast and Slow
Learn more: Read the publication, Behavioral Economics and the Conduct of Benefit-Cost Analysis