Tversky, Amos, 1937-1996.Quotation:Stanford professor of psychology
Davis Brack Professor of Behavioral SciencesAmerican/Israeli Psychologist.
spouse: Barbara Tversky, Prof. of Pyschology, Stanford
Honors, Awards, etc.:
a MacArthur Prize in 1984
a member of the National Academy of Sciences in 1985
Grawemeyer Award, 2003 (posthumously)Education:
Bachelor's, Hebrew University, 1961
PhD, U. of Michiga, 1965
Whenever there is a simple error that most laymen fall for, there is always a slightly more sophisticated version of the same problem that experts fall for.
http://www.stanford.edu/dept/news/pr/02/grawemeyer20031211.html12/6/02
CONTACT: Lisa Trei, News Service: (650) 725-0224, lisatrei@stanford.edu
Amos Tversky posthumously wins 2003 Grawemeyer Award with Nobel Laureate Daniel Kahneman
Amos Tversky, a Stanford psychology professor who died in 1996, and his longtime colleague, Princeton psychologist Daniel Kahneman, have jointly won the 2003 Grawemeyer Award for Psychology.
The $200,000 prize, awarded for the third time by the University of Louisville in Kentucky, recognizes outstanding contributions to the field of psychology. The honor will be presented at a banquet in Louisville on April 3.
Working as a team for nearly three decades, Kahneman and Tversky revolutionized the scientific approach to decision making, ultimately affecting all social sciences and many related disciplines.
In October, Kahneman won the Nobel Memorial Prize in Economic Sciences for the same research, sharing the award with Vernon Smith of George Mason University. The Nobel committee does not make posthumous awards, but in interviews Kahneman said the honor also belonged to Tversky, his longtime colleague and friend. "The prize ... is quite explicitly for joint work, but unfortunately there is no posthumous prize," Kahneman told Stanford Report. The Nobel Prize will be presented Dec. 10 in Stockholm.
Kahneman and Tversky pioneered the field of behavioral economics. In developing their so-called "prospect theory," the psychologists argued that people are not as calculating as economic models assume. Instead, they said, people repeatedly make errors in judgment that can be predicted and categorized. A 1979 paper they wrote on the subject in Econometrica is one of the most widely cited papers in economics. As a statement by the Grawemeyer Award committee noted, "It is difficult to identify a more influential idea than that of Kahneman and Tversky in the human sciences."
The Grawemeyer Foundation awards accomplishments in five fields psychology, music composition, education, religion and ideas improving world order. Each field is awarded a $200,000 prize for a total of $1 million. The work recognizes powerful ideas or creative works in the sciences, arts and humanities. Last year, Stanford psychology Professor David Rumelhart jointly won the award with James McClelland of Carnegie Mellon University.
Charles Grawemeyer was an industrialist, entrepreneur and University of Louisville graduate who died in 1993. He created the awards in 1984, distinguishing them by honoring ideas rather than personal achievement. He insisted that the selection process for each of the five awards -- although dominated by professionals -- include one step involving a lay committee knowledgeable in each field. As Grawemeyer saw it, great ideas should be accessible to everyone and not be the private treasure of academics.
MEMORIAL RESOLUTION SenD#4782
===================AMOS TVERSKY
(1937-1996)Amos Tversky, Davis Brack Professor of Behavioral Sciences and one of the
world's most respected and influential psychologists died June 2, 1996, of
metastatic melanoma, at the age of 59. Amos' contributions to the social
sciences, and to Stanford, were monumental and will continue to make their
influence felt for years to come.His most important papers, many of which were written with his longtime friend
and collaborator, Daniel Kahneman, were unique in their depth and in the
breadth of their impact. Through a combination of carefully wrought
experiments, elegant formalizations, and an uncanny ability to draw upon
everyday experience, they offered compelling accounts of processes and
shortcomings that characterize human judgment and decision making. Amos' work
already has exerted a major impact not only on virtually every subdiscipline
of psychology, but also in statistics, law, medicine, business, and other
fields in which decision makers must weigh costs and benefits in the face of
uncertainty. The decision of litigants pondering whether to settle or go to
court, engineers weighing safety measures, and young couples considering
whether to invest in a trip to Paris or the down payment on a car can be
understood (and often could have been made wiser) through his theorizing and
research.It is the science of economics, however, in which Tversky's and Kahneman's
ultimate influence is likely to be most lasting and profound. Most economic
analysis presupposes the rationality of actors' decisions and of the judgments
and predictions upon which those decisions are based. Tversky and Kahneman
challenged such presumptions. They demonstrated that very small risks are
given disproportionate weight, that prospective losses and gains are not
treated symmetrically, that the presence or absence of non-selected
alternatives can reverse preference orderings, and that the manner in which
options are semantically or mathematically "framed" can exert undue influence
on decision makers. These violations of normative standards, in turn, are apt
to distort private decisions and public policy alike.Although his best known work was contained in his papers on the heuristics of
judgment and on sources of suboptimal decision making, Amos also made major
contributions to many other areas of psychology, from the foundations of
measurement to the nature of similarity assessment and the misperception of
randomness or chance. As always, counterintuitive experimental results were
his hallmark. In one notable paper, he illustrated that people judge
similarity asymmetrically; for example, they regard Tel Aviv to be more like
New York than vice versa (a powerful demonstration of the inadequacies of
Euclidean metric models of stimulus presentation). In another instantly
famous paper he confounded basketball experts by showing that the so-called
"hot-hand" was an illusion, that successive "hits" and "misses" by NBA players
did not cluster together more than expected by the dictates of chance. In yet
another memorable study with Kahneman, he showed that Stanford undergraduates,
guided by their reliance upon assessments of similarity or
"representativeness" judged the likelihood that an outspoken young liberal
named "Linda" (described to them in a brief paragraph) was a "feminist bank
teller" to be greater than the likelihood simply that she was a bank teller,
thereby violating a basic tenet of formal logic. Focusing again and again on
the gap between actual human intellectual performance and the normative
standards that should seemingly govern such performance, Amos produced at
least a dozen papers that, even by his own stringent standards, can
justifiably be termed classics.Amos' contributions to the Stanford community were similarly memorable. A
member of the faculty senate from 1991 on, and a key advisory board member,
his counsel was sought and valued by administrators, colleagues, and students
alike. Amos' intellectual courage, especially his willingness to challenge
slipshod reasoning or politically fashionable cant were legendary. But his
integrity, fairness, openness to the ideas of others, and unfailing good humor
were equally notable. The combination of respect and affection that Amos
enjoyed so universally was captured by President Gerhard Casper who
characterized him as coming "as close to the ideal of a university faculty
member as any colleague I have known in my almost four decades in higher
education."Amos Tversky was born in Haifa, Israel, on March 16, 1937 to parents who
emigrated from Poland to Russia. His father, Yosef, put his medical training
to use as a veterinarian and his mother Genia, served in the Knesset from its
establishment in 1948 until her death in 1964. As a young man, Amos became an
officer in an elite paratrooper unit, eventually fought in three wars, and
rose to the rank of captain. An authentic war hero, Amos' greatest fame came
for rescuing a non-commissioned officer during maneuvers. As Danny Kahneman
described the 1956 incident, the soldier "froze" after placing a charge to
blow a hole in a barbed wire fence, literally lying on top of the explosive.
Amos, then a 19 year old lieutenant, but destined to become a world authority
on risk assessment and decision making, knew the explosion would occur within
a few seconds. Nevertheless, he ran to the soldier, picked him up and threw
him to safety, only to be wounded himself. For this display of valor, he
earned Israel's highest military decoration.Amos earned a bachelor's degree from Hebrew University in 1961, and his
doctorate in 1965 from the University of Michigan. While there, he met and
married Barbara Gans, a fellow graduate student in cognitive psychology, who
is now a professor in the Stanford Psychology Department. After holding
teaching positions at Michigan and Harvard, Amos returned to Hebrew
University, where he began his long collaboration with Danny Kahneman. He
remained at Hebrew University until joining the Stanford Faculty in 1978. In
his 17 years at Stanford, he showed himself to be a brilliant lecturer,
mentored a series of superb graduate students and post-doctoral fellows, and
set an enviable but unreachable intellectual standard for his colleagues. He
also contributed to a number of interdisciplinary programs, and was a
cofounder of the Stanford Center of Conflict and Negotiation.Amos' accomplishments were recognized with all the honors that academia can
bestow. A fellow at the Center for Advanced Study in 1970, he was elected to
the American Academy of Arts and Sciences in 1980, and the National Academy of
Science in 1985. He also won (with Kahneman) the American Psychological
Association's award for distinguished scientific contribution in 1982, and
MacArthur and Guggenheim Fellowships in 1984, and was awarded honorary
doctorates by the University of Chicago, Yale University, The University of
Goteborg in Sweden and the State University of New York at Buffalo.Throughout his career, Amos' intellectual and emotional connections to Israel
remained strong. He was affiliated with Tel Aviv University and maintained
close ties with Hebrew University as well, returning each year to deliver
lectures and continue his collaboration with numerous colleagues and students.
Fittingly, well-attended memorial symposia were held in 1997, both at Stanford
and in Israel. At each, students and colleagues from psychology and a range
of other disciplines lauded Amos' intellectual contributions; but they also
spoke with great affection, and profound sense of loss, about his warmth, his
humanity, and his joie de vivre. As more than one of his collaborators noted
there simply was no one more fun to talk with, to, work with, or simply be
with. He truly radiated a "special light."In the last months of Amos' life he continued, with characteristic courage and
remarkable good cheer, to live the life he valued most. He completed papers
and a final edited volume with Danny Kahneman, fulfilled his responsibilities
to the advisory board with undiminished commitment, watched NBA basketball,
read about physics and physicists (a lifelong avocation), and enjoyed poetry,
prose, and music in Hebrew, the language he so loved. He also spent
increasingly amounts of time with Barbara and his children, Oren, Tal, and
Dona, telling wonderful stories, and distilling the wisdom of his remarkable
lifetime of experience. As his strength diminished, and the impact of his
illness could no longer be concealed or ignored, he increasingly was obliged
to give comfort not only to his family, but to shocked friends and colleagues
as well. With characteristic wisdom, and grace, he helped us "frame" his 59
years not as a tragically shortened life, but as a wonderfully fulfilling and
complete life‹albeit one that happened to be too short. He reminded us, as he
always did, of the privilege he felt in being associated with university life.
Amos died at home peacefully, in the embrace of his family, his personal and
intellectual legacy secure. His life defined what it meant to be a great
psychologist and colleague. It also defined what it means to be a mensch.
Committee:
Kenneth Arrow, Chair
Gordon Bower, Psychology
Brad Efron, Statistics
Eleanor Maccoby, Psychology
Lee Ross, Psychology
Amos Tversky
1937-1996Dr. Amos Tversky died at age 59 on Sunday at his home in Stanford, Calif. The cause was metastatic melanoma, said Stanford University, where he was the Davis-Brack Professor of Behavioral Sciences.
Dr. Tversky once said he merely examined in a scientific way things about behavior that were already known to "advertisers and used-car salesmen," and much of his work has indeed had an economic slant, shaping the way economists look at decision making by consumers and business executives. It has also influenced statisticians and other researchers interested in how decisions involving risk are made in fields like medicine or public policy.
His research showed that people do not always behave rationally when they make decisions, that they generally put more emphasis on risk than benefits and that there are many more quirks in the human reasoning process than many earlier economic and psychological theories had contended.
Dr. Tversky began his work on decision-making in Israel with Dr. Daniel Kahneman, now of Princeton University. Dr. Tversky was not averse to taking personal risks himself, Dr. Kahneman said. Dr. Tversky was born on March 16, 1937, in Haifa in what was then the British protectorate of Palestine. He fought in three Middle East wars, in 1956, 1967, and 1973, winning Israel's highest honor for bravery in a 1956 border skirmish.
Dr. Kahneman said that Dr. Tversky rescued a soldier who had gone forward with an explosive charge to blow up some barbed wire and frozen, lying down on top of the explosive after lighting the fuse. He said Dr. Tversky reached the man and threw him to safety but was wounded.
Dr. Tversky got his bachelor's degree from Hebrew University in 1961 and his doctorate from the University of Michigan in 1965. He won many awards, including a MacArthur Foundation fellowship in 1984.
In addition to his wife, he is survived by two sons, Oren of San Francisco, and Tal, of Stanford; a daughter, Dona, of Stanford, and a sister, Ruth Ariel, of Jerusalem.
_____________________________________________________________________________________
Editor's note:
The above obituary was excerpted from a New York Times article by Karen Freeman. Dr. Tversky has had a great impact on marketing thought through his work on choice models, risk, uncertainty, and cognitive psychology. The members of the College on Marketing will miss him.
Remembering Amos Tversky
by Ward EdwardsOn June 2, 1996, Amos Tversky died of melanoma. He was born in 1937 in Israel. His undergraduate education was at Hebrew University. In 1965 he got his Ph.D. in Psychology from the University of Michigan, where he met and married Barbara while both were graduate students. Barbara is now a Professor of Psychology at Stanford. They had three children, Oren, Tal, and Dona.
After a post-Ph.D. year visiting Harvard, he returned to Israel and Hebrew University, becoming a full Professor of Psychology there in 1972. In 1978 he moved permanently to Stanford’s Psychology Department. He remained a Permanent Fellow of the Sackler Institute of Advanced Studies, Tel Aviv University, and traveled to Israel often during his Stanford years.
Amos wrote prolifically. He was an author or editor of 8 books; a ninth, in Hebrew, is in press. He published 106 articles, many with co-authors, in a very wide variety of distinguished journals. Twelve more were in press when he died, and four more were in earlier stages.
Amos’s accomplishments were recognized early and often. He joined the Society of Experimental Psychologists in 1979, received a Distinguished Scientific Contributions award from the American Psychological Association in 1982, a MacArthur Prize in 1984, and became a member of the National Academy of Sciences in 1985. Four universities, including Chicago and Yale, awarded him honorary doctorates. His most recent honor was the Warren Medal of the Society of Experimental Psychologists in 1995.
Amos is a dominant figure in cognitive psychology and behavioral decision theory. Three research interests dominate Amos’s published output: cognitive illusions, decision making, and the foundations of measurement. A very crude count of papers I felt I could categorize from memory or title yielded counts of 50, 38, and 25 for these three topics.
Research on the Cognitive Illusions
Daniel Kahneman, now Professor of Psychology at Princeton, was Amos’s closest collaborator from 1970 till now. Most early papers on cognitive illusions were by both. The very widely heard message of those and later papers was that people routinely violate normative rules of thought and choice in consistent, predictable ways. Such violations, now called cognitive illusions, can show themselves in a wide variety of intellectual tasks, many but not all of which require that a respondent make probability assessments. Lesser themes later emerged as parts of the same message: people do not know what they want, they make predictable errors in the application of principles drawn from formal logic to everyday intellectual tasks, and many others. The central point is that the phenomena discovered in cognitive illusion experiments are reliable, reproducible, and substantial in size. Two implications follow. One is that they need to be explained, and that theories explaining them should be key elements of a positive science of human judgment. The other is that theories that require such phenomena not to occur, and practical systems or procedures that depend on error-prone human judgments, should be avoided or mistrusted.
The demonstration experiments that supported these views introduced a style of experimentation that has been widely used by cognitive psychologists since then. Rather than performing elaborate parametric variations and obtaining complex functions as results, this style embodies the single important theoretical question in a scenario, as much like everyday life as is consistent with the requirement that the scenario be linked to a question that has an unambiguous normative answer. The scenario and question are incorporated into a booklet of scenarios and questions; each may be part of a different experiment. The booklets are distributed to subjects, often when they are assembled in groups. Data analysis and result presentation can be as simple as x% of subjects chose A and (100 - x)% chose B.
Prospect Theory
A mathematical model of human uncertainty assessment and of choice under uncertainty, called Prospect Theory, predicts some categories of human errors quite well. Its original version, first published in 1979, remains the dominant psychological theory about how people make choices. Prospect Theory was revised in 1992-93 into cumulative Prospect Theory, in order to increase the number of elements in a distribution beyond 3 and in order to be able to account for some experimental data on context dependency, not well explained by the earlier version, by shifting to a cumulative representation. What response cumulative Prospect Theory will get from Prospect Theory users is not yet clear.
Though Prospect Theory explains many of the cognitive illusions, its content goes far beyond that purpose. It is a general and universal theory of decision making—having the same scope as the idea that people make choices that maximize expected utility. The latter is, of course, the earlier theory that Prospect Theory is supposed to replace, at least in its descriptive functions.
Impacts of the Cognitive Illusions and of Prospect Theory
The message of systematic, predictable human intellectual error was addressed in part to scientists, e. g. economic theorists, whose models are built on assumptions the essence of which is that people make rational inferences and choices. Reports containing both experimental data and formal argument appeared in such economic journals as Econometrica, The Journal of Business, The American Economic Review, Journal of Economic Perspectives, and the Quarterly Journal of Economics, as well as in more general journals such as Erkenntnis, Cognition, and the Journal of the Royal Statistical Society. The impact on economic theorists has been profound. Some have sought to explain the findings away, even going so far as to replicate psychological experiments. These efforts, in my view, have been uniformly unsuccessful. Some have attempted to incorporate at least some of the features of Prospect Theory into their assumptions about how human beings make economically significant choices. Many have not changed their assumptions about the rationality of human behavior, but have felt the need to explain why not.
The examples used to illustrate cognitive illusions are easy to understand, vivid, and reliable. It is simply a fact that people find errors, preferably costly ones, far more interesting than correct performances. As a result, the message that people are intellectually error-prone has spread far from the critical academic environments that gave it birth, and has had important influences in a wide variety of contexts.
Research on the Foundations of Measurement
Another research domain in which Amos was a leader was the axiomatic and mathematical foundations of measurement, especially measurement of behavior. Its main publication outlets were three books written collaboratively by Krantz, Luce, Suppes, and Tversky, and published in 1971, 1989, and 1990.
These three books are today a necessary part of the background of anyone who has a quantitative interest in behavioral phenomena. Perhaps the most useful tool contained in them is simultaneous conjoint measurement, a technique for setting objects in position on more than one dimension at once, on the basis of judgments concerning the stimulus as a whole.
Techniques for applying the ideas of conjoint measurement quickly came to be used by market researchers and others, since they were a more objective-sounding way of approaching the market research task than were the techniques of multiattribute utility measurement.
Amos’ Legacy
Every primary report of a new batch of observations and thinking that Amos published contained all of the following ingredients:
1. A new observation or a new idea.
2. A careful formal treatment of the idea.
3. An attempt to put the new idea into the context of other work, especially that on Prospect Theory.
4. An attempt to identify at least a topic for application, or perhaps even to spell out the details of an application and its outcome.
The thoroughness and care with which he applied all four of these criteria to every publication is astonishing.
Certainly the care and depth of thought that shines through every paper on which Amos Tversky’s name appears, regardless of order of authorship, more than explains his overwhelming impact. The broad outlines of contemporary cognitive science show his fingerprints everywhere. To say that he will be missed is an understatement. We who will do the missing will continue to work in an intellectual environment of which he was a major designer. That is our good fortune, and his lasting achievement.
Nobel Winner Receives $200,000 Psychology Award
PR NewswireDecember 5, 2002
Louisville, Ky., Dec. 5--DANIEL KAHNEMAN, A PSYCHOLOGIST WHO WON THE NOBEL IN ECONOMICS, earned the 2003 University of Louisville Grawemeyer Award for Psychology. He shares the prize with former colleague, the late Amos Tversky, who received the award posthumously.
The psychologists who revolutionized a scientific approach to decision making were awarded $200,000.
"I am happy to be the recipient of the prestigious Grawemeyer Award," said Kahneman. "Naturally, my joy is mixed with the sadness of not being able to share the experience with Amos Tverksy...Great collaborations are rare and precious events, and joint recognition of joint achievements is one way to
protect and promote them."...Kahneman and Tversky demonstrated that normative mathematical models of probability and choice don't account for most intuitive human decisions. Instead, a series of psychological principles, often simplifying a problem, guide behavior in uncertainty. By identifying these biases, they clarified
challenges for education in economics and medical decision-making....KAHNEMAN is the Eugene Higgins Professor of Psychology and professor of public affairs, Woodrow Wilson School, at Princeton University. He IS ALSO PROFESSOR EMERITUS AT THE UNIVERSITY OF CALIFORNIA, BERKELEY....
http://www.j-bradford-delong.net/movable_type/archives/001025.html
Amos Tversky
The Boston Globe writes about Amos Tversky--the Third Man who should have been awarded this year's economics Nobel Prize, but who died back in 1996.--------------------------------------------------------------------------------
The man who wasn't there
Why Amos Tversky, maestro of the irrational, deserved this year's Nobel Prize in economics
By James Ryerson, 10/20/2002
JUST AS BEATLES fans couldn't fully appreciate the 1997 knighting of Sir Paul McCartney in the absence of the late John Lennon, so the announcement of this year's Nobel Memorial Prize in Economic Science felt incomplete. At a news conference at Princeton University on Oct. 9, the psychologist Daniel Kahneman, who won the Nobel this year along with the economist Vernon L. Smith, expressed regret that his longtime collaborator Amos Tversky wasn't able to share the distinction with him. Tversky died in 1996, and while he did receive a citation from the prize committee, he couldn't receive the prize itself: Nobels are not awarded posthumously.
Tversky and Kahneman are nearly always mentioned in the same breath. In the 1970s, the two Israeli-born psychologists devised a series of ingenious experiments to expose the illogical ways in which people make decisions that involve probability - everything from playing roulette to guessing what someone does for a living. But Tversky also had a successful career in his own right. At 19, before he became a worldwide expert on risk assessment, he earned Israel's highest military decoration by saving the life of a fellow soldier who had frozen in panic after placing an explosive charge. Tversky daringly intervened and was wounded by the explosion. After receiving his doctorate at the University of Michigan, he taught at Hebrew University, later moving to Stanford University, where he worked for many years until his death.
Though this year 's Nobel Prize will only cement his link with Kahneman, Tversky also produced important insights about human irrationality without the assistance of his colleague. In an eye-opening 1985 journal article, ''The hot hand in basketball: On the misperception of random sequences,'' Tversky and two other authors set out to correct the perception, common among basketball fans and players alike, that players tend to get ''hot'' - i.e., they sometimes hit a string of shots that is markedly longer than what you would have expected on the basis of their overall shooting percentage. Interviews with the Philadelphia 76ers revealed that the players put a good deal of faith in the ''hot hand'' concept, regularly passing the ball to a teammate who had made a series of consecutive shots so that he could shoot again. The 76ers' own shooting guard, Andrew Toney, was widely cited by fans as a classic streak shooter. But Tversky would have none of it.
Scrutinizing the field-goal records for home games of individual members of the 1980-1981 76ers (including the famously ''streaky'' Toney), Tversky and his coauthors failed to find statistical evidence of the hot hand phenomenon. The paper also examined the data for all pairs of free throws by the Boston Celtics during the 1980-1981 and 1981-1982 seasons. None of the players - not Larry Bird, not Robert Parrish, not Kevin McHale - demonstrated a statistical tendency to have the success of their first shot affect the success of their second shot.
The spectacle that basketball fans profess to see, Tversky argued, is nothing more than the standard laws of chance, observed through the imperfect lens of human cognition. Specifically, he noted, people have a tendency to expect the overall odds of a chance process (say, the 50 percent distribution of heads on a flipped coin, or the 46 percent accuracy of Toney's field-goal shooting) to apply to each and every segment of the process. For instance, when flipping a coin 20 times, it's not uncommon to see a string of four heads in a row. Yet when people are paying attention to a shorter sequence of the 20 coin flips, they are inclined to regard a string of four heads as nonrandom - as a hot streak - even though a strict back-and-forth of heads and tails throughout the 20 flips would be far less likely.
The same mental foible, Tversky and Kahneman discovered, lies at the heart of the familiar ''gambler's fallacy.'' After witnessing a long run of red on a roulette wheel, for example, gamblers often become extremely confident that the next spin will be black, when in fact the chances remain at roughly 50 percent. Again, the confusion arises from an impulse to see the overall odds of the wheel reflected in any given sequence of spins. Because the appearance of black after a long run of red would seem to help restore the even balance of colors that the wheel guarantees over time, gamblers become convinced that the wheel is ''due'' to hit black.
Tversky and Kahneman stressed that such reasoning, though erroneous, is based on a certain sort of wisdom. After all, in most cases it's not a bad rule of thumb to assume that two similar sets - say, five spins of the roulette wheel and 500 of them - will consistently share similar features.
Some philosophers and evolutionary theorists have suggested that we evolved this sort of cognitive quirk precisely because of its rough-and-ready usefulness, because as a general strategy for survival it has proven good enough. Hard-wired into our brains or not, it's not limited to uneducated rubes, casinogoers, and NBA players: At meetings of the Mathematical Psychology Group and the American Psychological Association, the same illogic was demonstrated by a majority of the scientists who responded to a questionnaire that included a disguised version of the roulette-wheel dilemma.
But is Kahneman himself an exception to the rule? One of the other common blunders of reasoning that he and Tversky discovered is the tendency to assess the frequency of a given event by how easy it is to think of examples of that event. Most people will estimate that there are more English words that begin with the letter ''k'' than those whose third letter is ''k'' - even though the opposite is true - simply because it's easier to think of examples of the former. The psychologists Michael Ross and Fiore Sicoly have pointed out another instance of this irrational tic: the tendency of researchers who work in partnership to sincerely claim more credit for themselves than there is credit to go around. It's much easier, after all, to call to mind one's own blood, sweat, and tears than someone else's. But as Kahneman's tribute to his late friend's equal importance suggests, he's rational to the core.
James Ryerson is a senior editor of Legal Affairs.
This story ran on page D1 of the Boston Globe on 10/20/2002.
© Copyright 2002 Globe Newspaper Company.
A CONVERSATION WITH DANIEL KAHNEMAN
On Profit, Loss and the Mysteries of the Mind
By ERICA GOODE"Kahnemanandtversky."
Everybody said it that way.
As if the Israeli psychologists Daniel Kahneman and Amos Tversky were a single person, and their work, which challenged long-held views of how people formed judgments and made choices, was the product of a single mind.
Last month, Dr. Kahneman, a professor at Princeton, was awarded the Nobel in economics science, sharing the prize with Vernon L. Smith of George Mason University. But Dr. Kahneman said the Nobel, which the committee does not award posthumously, belongs equally to Dr. Tversky, who died of cancer in 1996 at 59.
"I feel it is a joint prize," Dr. Kahneman, 68, said. "We were twinned for more than a decade."In Jerusalem, where their collaboration began in 1969, the two were inseparable, strolling on the grounds of Hebrew University or sitting at a cafe or drinking instant coffee in their shared office at the Van Leer Jerusalem Institute and talking, always talking. Later, when Dr. Tversky was teaching at Stanford and Dr. Kahneman at the University of British Columbia, they would call each other several times a day.
Every word of their papers, now classics studied by every graduate student in psychology or economics, was debated until "a perfect consensus" was reached. To decide who would appear as first author, they flipped a coin.
Wiry, charismatic, fizzing with intelligence, Dr. Tversky was younger by a few years. Dr. Kahneman, as intellectually keen, was gentler, more intuitive, more awkward.
Together, the psychologists developed a new understanding of judgments and decisions made under conditions of risk or uncertainty.
Economists had long assumed that beliefs and decisions conformed to logical rules. They based their theories on an ideal world where people acted as "rational agents," exploiting any opportunity to increase their pleasure or benefit.
But Dr. Kahneman and Dr. Tversky demonstrated that in some cases people behaved illogically, their choices and judgments impossible to reconcile with a rational model. These departures from rationality, the psychologists showed, followed systematic patterns.
For example, the exact same choice presented or "framed" in different ways could elicit different decisions, a finding that traditional economic theory could not explain.
In an oft-cited experiment, the psychologists asked a group of subjects to imagine the outbreak of an unusual disease, expected to kill 600 people, and to choose between two public health programs to combat it.
Program A, the subjects were told, had a 100 percent chance of saving 200 lives. Program B had a one-third chance of saving 600 lives and a two-thirds probability of saving no lives.
Offered this choice, most of the subjects preferred certainty, selecting Program A.
But when the identical outcomes were framed in terms of lives lost, the subjects behaved differently. Informed that if Program A were adopted, 400 people would die, while Program B carried a one-third probability that no one would die and a two-thirds probability that 600 people would die, most subjects chose the less-certain alternative.
Over more than two decades, working together or with others, Dr. Kahneman and Dr. Tversky elaborated many situations in which such psychological "myopia" influenced people's behavior and offered formal theories to account for them.
They established, among other things, that losses loom larger than gains, that first impressions shape subsequent judgments, that vivid examples carry more weight in decision making than more abstract — but more accurate — information.
Anyone who read their work, illustrated, as one admirer put it, with "simple examples of irresistible force and clarity," was drawn to their conclusions.
Even economists, unused to looking to psychology for instruction, began to take notice, their attention attracted by two papers, one published in 1974 in Science, the other in 1979 in the economics journal Econometrica. Eventually, the psychologists' work provided the undergirding for behavioral economics, the approach developed by Dr. Richard Thaler.
In a recent conversation, Dr. Kahneman, who carries both American and Israeli citizenship, talked about what happens when psychology and economics meet.
Q. Did you set out to challenge the way economists were thinking?
A. We certainly didn't have in mind to influence economics.In the first years, economists, and philosophers, too, were simply not interested in the trivial errors that we as psychologists were studying.
I have a clear memory of a party in Jerusalem around 1971, attended by a famous American philosopher. Someone introduced us and suggested that I had an interesting story to tell him about our research. He listened to me for about 30 seconds, then cut me off abruptly, saying, "I am not really interested in the psychology of stupidity."
Our work was completely ignored until our 1974 paper, which eventually had an impact on both economics and epistemology. Of course, we did not mind in the least because economists were not our intended audience anyway; we were talking to psychologists. It came as a pleasant surprise when others started to pay attention.
Q. Why is the rational model of human behavior so entrenched in economic theory?
A. There's a very good reason for why economics developed the way it did, and that is that in many situations, the assumption that people will exploit the opportunities available to them is very plausible, and it simplifies the analysis of how markets will behave.You know, when you're thinking of two stalls next to each other selling apples at different prices, then you're assuming that the fellow who is selling them at too high a price is just not going to have customers.
So you get rationality at this level, and it buys a lot of predictive power by this assumption. When you are building a formal theory, you want to generalize that assumption, and then you end up making people completely rational.
Q. You and Amos Tversky are perhaps best known for prospect theory. Could you explain what this is based on?
A. When I teach it, I go back to 1738. In 1738, Daniel Bernoulli wrote the big essay that introduced utility theory. Utility really means pleasure more than anything else.The question that Bernoulli put to himself was "How do people make risky decisions?" And he analyzed really quite a nice problem: a merchant thinking of sending a ship from Amsterdam to St. Petersburg at a time of year when there would be a 5 percent probability of the ship being lost.
Bernoulli evaluated the possible outcomes in terms of their utility. What he said is that the merchant thinks in terms of his states of wealth: how much he will have if the ship gets there, if the ship doesn't get there, if he buys insurance, if he doesn't buy insurance.
And now it turns out that Bernoulli made a mistake; in some sense it was a bewildering error to have made. For Bernoulli, the state of wealth is the total amount you've got, and you will have the same preference whether you start out owning a million dollars or a half million or two million. But the mistake is that no merchant would think that way, in terms of states of wealth. Like anybody else, he would think in terms of gains and losses.
That's really a very simple insight but it turns out to be the insight that made the big difference. Because, if that's not the way that people think, if people actually think in terms of gains and losses and not in terms of states of wealth, then all the mathematical analysis that has been done which assumed people do it that way is not true. It took us a long time to figure it out.
Q. What kinds of things does prospect theory explain?
A. I think the major phenomenon we observed is what we called "loss aversion." There is an asymmetry between gains and losses, and it really is very dramatic and very easy to see. In my classes, I say: "I'm going to toss a coin, and if it's tails, you lose $10. How much would you have to gain on winning in order for this gamble to be acceptable to you?"People want more than $20 before it is acceptable. And now I've been doing the same thing with executives or very rich people, asking about tossing a coin and losing $10,000 if it's tails. And they want $20,000 before they'll take the gamble.
So the function for gains and losses is sort of kinked. People really discriminate sharply between gaining and losing and they don't like losing.
Q. How did prospect theory influence economists?
A. Correcting Bernoulli's error was influential, because it was picked up by Richard Thaler, who started behavioral economics. We provided cover for behavioral economics, because the challenge to the rational model was taken seriously and presented in a way that readers of the work found compelling.But it's not as if this has swept economics. It hasn't, and for very deep structural reasons, it's not going to. The rational model has a hold on economics, and it's going to stay that way. Behavioral economists fiddle with it, improving the assumptions and making them psychologically sensible. But it's not a completely different way of doing economic theory.
Q. One of the things you are studying now is well-being. Does this connect in any way to economics?
A. I would like to develop a measure of well-being that economists would take seriously, an alternative to the standard measure of quality of life.We're attempting to measure it not by asking people, but by actually trying to measure the quality of their daily lives. For example, we are studying one day in the lives of 1,000 working women in Texas. We have people reconstruct the day in successive episodes, as recalled a day later, and we have a technique that recovers the emotions and the feelings. We know who they were with and what they were doing. They also tell us how satisfied they are with various aspects of their lives. We know a lot about these ladies.
Q. What are you finding out?
A. I'll give you a striking finding. Divorced women, compared to married women, are less satisfied with their lives, which is not surprising. But they're actually more cheerful, when you look at the average mood they're in in the course of the day. The other thing is the huge importance of friends. People are really happier with friends than they are with their families or their spouse or their child.Q. Why would divorced women be more cheerful?
A. So far, I don't understand it, but that's what the data says.
http://cognet.mit.edu/MITECS/Entry/gilovich
Tversky, Amos
Amos Tversky (1937-1996) was a cognitive and mathematical psychologist who was passionately committed to advancing knowledge of human judgment and DECISION MAKING, and the similarities between them. Tversky's contributions to these subjects, put forward with a research style that combined rigorous mathematical analysis with elegant empirical demonstrations and simple examples of irresistible force and clarity, had a profound influence on scholars in numerous disciplines. Indeed, one measure of Tversky's impact is how much his ideas have generated excitement and altered curricula in such varied fields as psychology, economics, law, medicine, political science, philosophy, and statistics.
Additional links
Nat'l Academy Press, Behavioral and Social Science: (1986), Choices, Values, and Frames
-- Thomas GilovichReferences
Bell, D. E., H. Raiffa, and A. Tversky, Eds. (1988). Decision Making: Descriptive, Normative, and Prescriptive Interactions. New York: Cambridge University Press.Gilovich, T., R. P. Vallone, and A. Tversky. (1985). The hot hand in basketball: On the misperception of random sequences. Cognitive Psychology 17:295-314.
Griffin, D., and A. Tversky. (1992). The weighing of evidence and the determinants of confidence. Cognitive Psychology 24:411-435.
Kahneman, K., and A. Tversky. (1972). Subjective probability: A judgment of representativeness. Cognitive Psychology 3:430-454.
Kahneman, K., and A. Tversky. (1973). On the psychology of prediction. Psychological Review 80:237-251.
Kahneman, K., and A. Tversky. (1979). Prospect theory: An analysis of decision under risk. Econometrica 47:263-291.
Kahneman, D., and A. Tversky. (1996). On the reality of cognitive illusions. Psychological Review 103:582-591.
Kahneman, D., P. Slovic, and A. Tversky, Eds. (1982). Judgment under Uncertainty: Heuristics and Biases. New York: Cambridge University Press.
Tversky, A. (1969). The intransitivity of preferences. Psychological Review 76:31-48.
Tversky, A. (1972). Elimination by aspects: A theory of choice. Psychological Review 79:281-299.
Tversky, A. (1977). Features of similarity. Psychological Review 84:327-352.
Tversky, A., and D. Kahneman. (1973). Availability: A heuristic for judging frequency and probability. Cognitive Psychology 5:207-232.
Tversky, A., and D. Kahneman. (1974). Judgment under uncertainty: Heuristics and biases. Science 185:1124-1131.
Tversky, A., and D. Kahneman. (1981). The framing of decisions and the psychology of choice. Science 211:453-458.
Tversky, A., and D. Kahneman. (1983). Extensional vs. intuitive reasoning: The conjunction fallacy in probability judgment. Psychological Review 91:293-315.
Tversky, A., and D. Kahneman. (1992). Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and Uncertainty 5:297-323.
Tversky, A., and D. J. Koehler. (1994). Support theory: A nonextensional representation of subjective probability. Psychological Review 101:547-567.
Tversky, A., and S. Sattath. (1979). Preference trees. Psychological Review 86:542-573.
Tversky, A., S. Sattath, and P. Slovic. (1988). Contingent weighting in judgment and choice. Psychological Review 95:371-384.
"Choices, values, and frames" by Daniel Kahneman and Amos Tversky
http://books.nap.edu/books/0309035880/html/153.html#pagetop
