Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2005-12-08
Number: 05-111/2
Author-Name: Floris Heukelom
Author-Email: F.Heukelom@uva.nl
Author-Workplace-Name: Faculty of Economics, Universiteit van Amsterdam
Title: The Origin of Prospect Theory, or Testing the Intuitive Statistician
Abstract: The origin of prospect theory is the desire to test the intuitive statistician in the real world. The development of this theory by the cognitive psychologists Kahneman and Tversky can be traced to the formers work in cognitive psychophysics, in which deviations from average behavior are termed (statistical) errors; and the latters work on decision theory, with its normative vs. descriptive framework. The combination of these two types of probabilistic psychology culminated in a new descriptive theory of human decision making in the real world, coined Heuristics and Biases. The 1979 Econometrica article applies this new descriptive theory to economists EUT. It equates the intuitive statistician with the rational economic man and shows how it descriptively fails.
Classification-JEL: B31; B41; D01; D81
Keywords: Kahneman and Tversky; Prospect Theory; Intuitive Statistician; Heuristics and Biases
File-Url: https://papers.tinbergen.nl/05111.pdf
File-Format: application/pdf
File-Size: 156326 bytes
Handle: RePEc:tin:wpaper:20050111