Daniel Kahneman

Works

On the Psychology of Prediction, Psychological Review; with Amos Tversky, 1973
Judgment under Uncertainty: Heuristics and Biases, Science, 1974
Prospect Theory: An Analysis of Decision under Risk, Econometrica, 1979
Intuitive Prediction: Biases and Corrective Procedures, TIMS Studies in the Management Sciences 12 (Forecasting, edited by Spyros Makridakis and Steven C. Wheelwright); with Amos Tversky, 1979
The Framing of Decisions and the Psychology of Choice, Science, 1981
Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking, Management Science, 1993
Thinking, Fast and Slow, 2011
The Big Idea: Before You Make That Big Decision, Harvard Business Review; with Dan Lovallo and Olivier Sibony, 2011

In Tactics of Organizational Politics

Ideas

Loss aversion and reference dependence. People judge outcomes as gains or losses relative to a reference point, usually the current position, and losses weigh more than gains of the same size; the 1979 paper puts it as losses looming larger than gains. Because the reference point can be moved by how a choice is described, the same option can be made to look like a gain or a loss. Caveat: The often quoted figure that losses count about twice as much as gains comes from later estimates, notably a median coefficient of 2.25 in Tversky and Kahneman's 1992 paper, and is not a constant. Gal and Rucker (Journal of Consumer Psychology, 2018) argue that the evidence for a general loss-gain asymmetry is weaker than usually assumed; reference dependence itself is less disputed.

Framing effects. Equivalent descriptions of the same choice produce predictable reversals of preference: in the best-known example, a public health program described in terms of lives saved draws risk-averse choices, and the same program described in terms of lives lost draws risk-seeking ones. The frame a decision-maker adopts is controlled partly by how the problem is put to them.

Availability and anchoring. People judge likelihood with a few mental shortcuts that are usually useful and sometimes badly wrong. Availability means judging how frequent or probable something is by how easily instances come to mind; anchoring means estimating by adjusting from a starting value, and the adjustment is usually too small.

System 1 and System 2. Kahneman describes two modes of thinking: System 1 is fast, automatic, and effortless, System 2 slow, deliberate, and effortful. Much judgment runs on System 1, and System 2 engages only when something demands effort, so people under time pressure or overload tend to accept the intuitive answer. Caveat: The book's chapter on priming relies on studies that have since failed to replicate, and it cites ego-depletion work; a 23-lab preregistered replication (Hagger and colleagues, Perspectives on Psychological Science, 2016) found an ego-depletion effect close to zero. The two-system description itself is a descriptive framework.

The inside view and the outside view. Decision-makers tend to treat each problem as unique: they isolate the current choice from future ones and ignore statistics from past cases. Taking this inside view, which anchors forecasts on the specific plan and its scenarios, produces bold, optimistic forecasts; the authors contrast it with an outside view that judges the plan by the results of a class of similar past cases.

What it explains

Kahneman's work explains why the way a choice is presented can decide it: whether it is described as avoiding a loss or securing a gain, which examples come to mind, which number is put on the table first, and how much time and attention the decision-maker has. Most of these effects are strongest when decisions are made quickly and in volume.

Tactics that draw on Daniel Kahneman (95)

In Thinking Tools

Known for

A psychologist who, with Amos Tversky, showed that intuitive predictions follow representativeness and neglect base rates and regression to the mean, and proposed correcting them by starting from the record of similar cases, the outside view. Thinking, Fast and Slow is his popular synthesis of that work, and it also carries Gary Klein's premortem. With Dan Lovallo and Olivier Sibony he later turned the bias research into a checklist of questions for reviewing a team's recommendation.