Choices, Values, and Frames
Edited by Daniel Kahneman,
Amos Tversky
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
Part I. Prospect Theory and
Extensions;
Part II. The Certainty Effect
and the Weighting Function;
Part III. Loss Aversion and
the Value Function;
Part IV. Framing and Mental
Accounting;
Part V. Applications;
Part VI. The Multiplicity of
Value;
Part VII. Choice over Time;
Part VIII. Alternative
Conceptions of Value;
Part IX. Experienced Utility.
320 pages