Choices, Values, and FramesDaniel Kahneman, Amos Tversky Cambridge University Press, 2000 M09 25 - 840 pages This book presents the definitive exposition of 'prospect theory', a compelling alternative to the classical utility theory of choice. Building on the 1982 volume, Judgement Under Uncertainty, this book brings together seminal papers on prospect theory from economists, decision theorists, and psychologists, including the work of the late Amos Tversky, whose contributions are collected here for the first time. While remaining within a rational choice framework, prospect theory delivers more accurate, empirically verified predictions in key test cases, as well as helping to explain many complex, real-world puzzles. In this volume, it is brought to bear on phenomena as diverse as the principles of legal compensation, the equity premium puzzle in financial markets, and the number of hours that New York cab drivers choose to drive on rainy days. Theoretically elegant and empirically robust, this volume shows how prospect theory has matured into a new science of decision making. |
Contents
Choices Values and Frames | 1 |
Prospect Theory An Analysis of Decision under Risk | 17 |
Advances in Prospect Theory Cumulative Representation of Uncertainty | 44 |
Compound Invariant Weighting Functions in Prospect Theory | 67 |
Weighing Risk and Uncertainty | 93 |
A BeliefBased Account of Decision under Uncertainty | 118 |
Loss Aversion in Riskless Choice A ReferenceDependent Model | 143 |
Anomalies The Endowment Effect Loss Aversion and Status Quo Bias | 159 |
Judicial Choice and Disparities between Measures of Economic Values | 424 |
Contrasting Rational and Psychological Analyses of Political Choice | 451 |
Conflict Resolution A Cognitive Perspective | 473 |
The Construction of Preference | 489 |
Contingent Weighting in Judgment and Choice | 503 |
ContextDependent Preferences | 518 |
Ambiguity Aversion and Comparative Ignorance | 528 |
Attribute Evaluability Its Implications for JointSeparate Evaluation Reversals and Beyond | 543 |
The Endowment Effect and Evidence of Nonreversible Indifference Curves | 171 |
A Test of the Theory of ReferenceDependent Preferences | 180 |
Diminishing Marginal Utility of Wealth Cannot Explain Risk Aversion | 202 |
Rational Choice and the Framing of Decisions | 209 |
Framing Probability Distortions and Insurance Decisions | 224 |
Mental Accounting Matters | 241 |
Toward a Positive Theory of Consumer Choice | 269 |
Prospect Theory in the Wild Evidence from the Field | 288 |
Myopic Loss Aversion and the Equity Premium Puzzle | 301 |
Fairness as a Constraint on Profit Seeking Entitlements in the Market | 317 |
Money Illusion | 335 |
Labor Supply of New York City Cab Drivers One Day at a Time | 356 |
Are Investors Reluctant to Realize Their Losses? | 371 |
Timid Choices and Bold Forecasts A Cognitive Perspective on Risk Taking | 393 |
Overconfidence and Excess Entry An Experimental Approach | 414 |
Preferences for Sequences of Outcomes | 565 |
Anomalies in Intertemporal Choice Evidence and an Interpretation | 578 |
ReasonBased Choice | 597 |
Value Elicitation Is There Anything in There? | 620 |
Economic Preferences or Attitude Expressions? An Analysis of Dollar Responses to Public Issues | 642 |
Experienced Utility and Objective Happiness A MomentBased Approach | 673 |
Evaluation by Moments Past and Future | 693 |
Endowments and Contrast in Judgments of WellBeing | 709 |
A Bias in the Prediction of Tastes | 726 |
The Effect of Purchase Quantity and Timing on VarietySeeking Behavior | 735 |
New Challenges to the Rationality Assumption | 758 |
775 | |
Author Index | 821 |
832 | |
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alternative ambiguity aversion Amos Tversky analysis assumption attribute average behavior bets chance to win choice choose concave condition consumers consumption context contrast costs cumulative prospect theory Daniel Kahneman decision maker decision weights dominance drivers economic elicitation endowment effect estimates evaluation example expected utility theory experience experimental Figure framing gains and losses gamble hedonic hypothesis implies increase indifference curves individual inflation investors judgments Kahneman and Tversky Knetsch Loewenstein loss aversion measures median mental accounting money illusion negative normative observed options outcomes participants percent positive prediction preference reversals present problem prospect theory psychological purchase questions rational reference point relative responses risk aversion risk seeking risky selling Slovic status quo status quo bias stocks subadditivity subjects suggests Table Thaler tion Tversky and Kahneman uncertainty utility function valuation value function violations wage weighting function