Daniel Kahneman, 1934-2024: Nobel Prize Winner & CASBS Legend
"Daniel Kahneman, the Nobel laureate, professor emeritus of psychology and public affairs at Princeton University, and among the most distinguished and consequential cognitive and behavioral scientists of the past half-century, passed away on March 27, 2024. He was 90.
"Daniel Kahneman was a CASBS fellow during the 1977-78 academic year, occupying office (called “studies” at CASBS) #6. (Notably, this remarkable class included two other future Nobel Prize winners – Oliver Williamson (2009) and Robert B. Wilson (2020) – as well as future Supreme Court Justice Ruth Bader Ginsburg.)
"Kahneman’s 1977-78 year is legendary for two reasons. First, it is here, at CASBS, where Kahneman and his principal collaborator of nearly a decade, Amos Tversky – who had a visiting appointment at Stanford University’s psychology department that year[1] – completed a paper they painstakingly had been working on for years: “Prospect Theory: An Analysis of Decision under Risk.” The paper, published in March 1979 in the journal Econometrica, is a landmark in the annals of the social sciences. The paper presents a direct challenge to standard expected utility theory through the concept of loss aversion, describing how economic agents assess prospective losses and gains in an asymmetric manner. In other words, people frame transactions or outcomes in their minds subjectively, affecting the value (or utility) they expect to receive.
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"Though Kahneman himself had expressed it in various ways over the years, he put it crisply in 2016:
"CASBS is where behavioral economics took shape. When Richard Thaler heard that Amos Tversky and I would be in Stanford, he finagled a visiting appointment down the hill to spend time with us. We spent a lot of time walking around the Center and became lifelong friends. Those long conversations that Dick had with Amos and me helped him construct his then heretical (and now well-established) view of economics, by using psychological observations to explain violations of standard economic theory.[5]
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