Daniel Kahneman (1934–2024)

Who They Were

Daniel Kahneman (1934-2024) was an Israeli-American psychologist whose research reshaped economics by showing that real human judgment departs systematically from the rational-agent model long assumed by the discipline. Working for decades with Amos Tversky, he studied how people actually decide under risk and uncertainty, drawing on experimental psychology rather than abstract theory. Their collaboration, beginning in the 1970s, became one of the most influential partnerships in modern social science. In 2002 Kahneman shared the Sveriges Riksbank Prize in Economic Sciences with the experimental economist Vernon Smith. Late in life he reached a wide general audience with Thinking, Fast and Slow (2011), which distilled decades of findings on the two systems of thought that guide human reasoning. He remained an active researcher and public intellectual until his death in 2024.

Key Contributions

Kahneman's central contribution, developed with Tversky, was prospect theory, published in Econometrica in 1979. It documented how people weigh gains and losses asymmetrically and value outcomes relative to a reference point, replacing the expected-utility assumptions that had dominated economics. Their earlier work identified cognitive heuristics and biases: their 1974 paper in Science described the availability heuristic, by which people judge probability by how easily examples come to mind. In experiments they showed that the same gamble may be accepted or rejected depending only on how it is worded. Kahneman also documented the endowment effect experimentally with Richard Thaler and Jack Knetsch, showing that people demand more to give up an item than they would pay to acquire it. His 2002 Nobel citation credited him with integrating insights from psychology into economics.

On EconRecall

Israeli-American psychologist whose work with Amos Tversky founded behavioural economics; shared the 2002 economics Nobel. Play the games that feature Daniel Kahneman: