Summary
This book, co-edited by Daniel Kahneman and Amos Tversky, presents research on decision-making, values, and framing effects. It explores concepts such as "Experienced Utility and Objective Happiness," drawing on Kahneman and Tversky's seminal 1979 work on "Prospect Theory." The collection examines how choices are made, influenced by psychological factors and the way information is presented, contributing to a deeper understanding of economic behavior and individual welfare.
The book clarifies the relationship between rational choice theory and philosophical accounts of human action, critiquing attempts to define welfare solely in terms of preferences or choices. It offers insights into the formation and modification of preferences, highlighting the interplay of reason and emotion in shaping them, and provides materials for constructing models of preference.
Key concepts
- Prospect Theory — A 1979 theory by Kahneman and Tversky that describes how people choose between probabilistic alternatives that involve risk, where the probabilities of outcomes are already known.
- Experienced Utility — The subjective experience of pleasure or pain associated with an outcome.
- Objective Happiness — A measure of happiness that can be assessed externally or through specific criteria.
- Preference Formation — The process by which individuals develop and modify their preferences.
From the book
Description: This book is about preferences, principally as they figure in economics. It also explores their uses in everyday language and action, how they are understood in psychology and how they figure in philosophical reflection on action and morality. The book clarifies and for the most part defends the way in which economists invoke preferences to explain, predict and assess behavior and outcomes. Hausman argues, however, that the predictions and explanations economists offer rely on theories of preference formation that are in need of further development, and he criticizes attempts to define welfare in terms of preferences and to define preferences in terms of choices or self-interest. The analysis clarifies the relations between rational choice theory and philosophical accounts of…
Snippet: ... <b>Kahneman</b> and Tversky , eds . , pp . 693-708 . 2000b . " Experienced Utility and Objective Happiness : A Moment ... <b>Amos Tversky</b> . 1979. “ Prospect Theory . ” Econometrica 47 : 263-91 . <b>Kahneman</b> , Daniel and <b>Amos Tversky</b> , eds ...