Daniel Kahneman; Nobel Prize Laureate. Rational and intuitive. Daniel Kahneman
(English) Daniel Kahneman; born March 5, 1934, Tel Aviv) is an Israeli-American psychologist, one of the founders of psychological economics and behavioral finance, which combines economics and cognitive science to explain the irrationality of a person's attitude to risk in decision making and in managing their behavior. Noted for his work, with Amos Tversky and others, in establishing a cognitive basis for common human fallacies in the use of heuristics, and in developing prospect theory; winner of the Nobel Prize in Economics in 2002 "for the application of psychological methods in economics, in particular - in the study of the formation of judgments and decision-making under uncertainty" (together with W. Smith), despite the fact that the research was conducted as a psychologist, and not as an economist.
Kahneman was born in Tel Aviv, spent his childhood years in Paris, and moved to Palestine in 1946. He received a bachelor's degree in mathematics and psychology from the Hebrew University of Jerusalem in 1954, after which he worked in the Israel Defense Forces, mainly in the psychological department. The unit in which he served was engaged in the selection and testing of recruits. Kahneman designed the personality assessment interview.
After his discharge from the army, Kahneman returned to the Hebrew University, where he took courses in logic and the philosophy of science. In 1958 he moved to the United States of America and received his Ph.D. in psychology from the University of California, Berkeley in 1961.
Since 1969, he collaborated with Amos Tversky, who, at the invitation of Kahneman, lectured at the Hebrew University on the estimation of the probability of events.
He currently works at Princeton University and also at the Hebrew University. He is on the editorial board of the journal Economics and Philosophy. Kahneman never claimed that he was the only one involved in psychological economics - he pointed out that everything that he received in this area, he and Tversky achieved together with their co-authors Richard Tailer and Jack Knetsch.
Kahneman is married to Anne Triesman, a renowned attention and memory researcher.
Explaining why he took up psychology, Kahneman once wrote:
It must have been late 1941 or early 1942. Jews were required to wear the Star of David and observe a 6pm curfew. I went to play with a Christian friend and stayed up late. I turned my brown sweater inside out so I could walk a few blocks to my house. I was walking down an empty street and saw a German soldier approaching. He was wearing a black uniform, which, I was told, should be especially avoided - it was worn by the SS. I approached him, trying to walk quickly, and noticed that he was staring at me. He called and hugged me. I was afraid that he would notice the star inside my sweater. He spoke to me in German, with great feeling. After releasing me from his embrace, he opened his wallet, showed me a photo of the boy and gave me some money. I went home more confident than ever that my mother was right: people are infinitely complex and interesting..
Scientific achievements
The first joint work of Kahneman and Tversky was devoted to the law of small numbers. Further collaboration led scientists to fundamental progress in understanding heuristics. In their works, they considered the heuristic features of probabilistic thinking. Their main focus was on accessibility, representativeness, anchoring (anchoring) and adjustment.
Accessibility is the tendency for people to overestimate the likelihood of an event if examples of this kind come easily to mind. Representativeness is the tendency to evaluate the likelihood of an event based on the extent to which this event correlates with a suitable mental model (for example, with a profession). Reinforcement and correction is the process of making a judgment in which the original answer acts as an anchor and additional information is used only to correct that answer.
Kahneman and Tversky's analysis of cognitive and situational factors helped to understand the psychological processes that govern human judgment and decision making.
Scientific works
People are stupid.
For this discovery, an Israeli scientist, Daniel Kahaneman, who works in, you guessed it, in the United States, received the Nobel Prize in Economics for 2002.
(However, this does not apply to you, dear reader. This is about others. :)
Through a series of precise scientific experiments, Kahneman was able to prove that most people do not use common sense in their daily lives. Even professors of mathematics in ordinary life rarely resort to elementary arithmetic operations.
Kahneman for the first time managed to introduce the concept of the human factor into the economy, to combine psychology and economics into a single science. Before him, economists wondered why the models they calculated give sudden failures, why do people behave differently from what they should be according to theory? Why does the stock exchange suddenly fall or why do people suddenly rush to the bank to withdraw deposits, change one currency for another?
The most interesting thing is that the Nobel Prize winner in economics has never studied economics, but has been studying psychology all his life. In this case, the psychology of choosing everyday economic decisions.
All economists before Kahneman, starting with Adam Smith, made the same mistake - they assumed that a person is guided by elementary logic and his own benefit - he buys where it is cheaper, works where he pays more, from two goods of the same quality he will choose the one that which is cheaper.
Kahneman's research has shown that things are not so simple. People don't seem to want to think. They are guided not by logic, but by emotions, random impulses; what you heard yesterday on TV, or from a neighbor, established prejudices, advertising, etc.
Here is an example. It turns out that if you lower the price, then the goods will not necessarily begin to sell out faster. Some will think that this is just a markdown of the goods due to poor quality. The same thing - if the price is increased, people will think that they are being offered a better product than before.
Economists before Kahneman naively believed that if a pieceworker were to get a higher rate, he would do a better job. It turns out that not always. Some - yes, really better. Others are the same: why give all the best if, with the same productivity, they will still receive more than before? Still others will work more slowly in order to get the same amount as before, with less labor.
The reasoning of economists before Kahneman resembled the reasoning of scientists before Galileo. Indeed, for thousands of years, all great minds have assumed that a heavy object dropped from a height will reach the ground faster than a light one. Children today think so too. This has been accepted for thousands of years, and it never occurred to anyone before Galileo to verify it. Imagine Galileo's surprise when he found that a wooden and iron ball dropped from the Leaning Tower of Pisa reach the ground in the same time.
So, according to Kahneman, in their daily lives people are not guided by elementary logic and elementary arithmetic.
I decided to check it out. Go, so to speak, along the path of Galileo.
Jerusalem street Agripas. On one side is Mahane Yehuda Bazaar. On the other side are a number of shops.
The shop sells eggs. A pack of 10 eggs costs 12 shekels.
Opposite, in the bazaar, they also sell eggs. A pack of 30 eggs costs 18 shekels.
The task for a first grade student is that an egg costs 1.20 in the store and 0.60 in the market. Exactly two times cheaper. Buying one tray of eggs in a store, a person loses 6 shekels. Buying two trays - 12.
I stood at the store and asked the same question to those who bought eggs - why did you do this? Can't you see it's half the price across the road?
The answers were distributed as follows:
1. Fuck you... - 75%
2. What's your business? Where I want, I buy there - 75%
3. Store-bought eggs are better. (Eggs are the same, I checked) - 8%
4.Yes, what's the difference? Will I be petty? - 6%
5. I always buy everything in this shop. It's more convenient for me - 9%
The fact that the answers add up to more than 100% means that one person could give more than one answer.
To the persons who answered under item 4, I suggested:
- By buying two trays of eggs in the store, you lost 12 shekels. If this amount does not matter to you, give me the same amount. The answer to this proposal - see paragraph 1
Here are more examples that, from my point of view, confirm Kahneman's theory.
A man goes to a restaurant and pays 100 shekels for a steak. Whereas a kilo of exactly the same steaks in the store costs 25 shekels. Five pieces. The difference is 20 times! The purchased steak only needs to be put in the oven. For many, this seems to be too much work. People stand in line at the restaurant. And from this restaurant they take out food in trays to a free canteen across the street. Where everything is given for free...
Kahneman is right.
It turns out that the joke is: “Did you buy this tie for $100? Idiot, around the corner are the same for 200!” - has a completely accurate economic justification. People assume that if a product is more expensive, then it is better.
The man wants to get rid of money. And he goes to a restaurant where a stranger will bring him food prepared from unknown products in an unknown way by another unknown person who does not know the tastes and requests of the client. For this, he will pay 10 times more than the products cost, and he will still be rude.
The restaurant is a place of economic and culinary hooliganism. The task of the restaurant is to "unwind" the client. Therefore, in the restaurant kitchen, the most uneconomical and harmful methods of cooking are used. The main thing is that the dish looks beautiful when served. Although in a second all this beauty will disappear.
At the exit from the supermarket, they sell hot sausages for 5 shekels a piece, which inside the same market cost 10 shekels for 20 pieces. 10 times difference!
Isn't Kahneman right?
The best psychologists in the world are racking their brains over how to give a person what he does not need. 98% of Pepsi-Cola's turnover goes to advertising. A person does not buy sweet syrup, but a lifestyle that has been hammered into his head.
A watch for 50 shekels shows the time exactly the same as for 10 thousand. A person does not buy a watch, a suit, furniture - he buys self-respect.
Kahneman is right. For some reason, people do not want to recognize simple and obvious things:
All kinds of parties, "Forums" and "Associations of aid" help only those who create them and work in them. For this they are created.
Here are simple rules for those who do not want to be deceived (I understand that thousands of agents of various firms who earn their living by hard work may be offended by me) ...
Anyone who calls you or stops you on the street hoping to sell you something is a scammer.
Anyone who tries to enter your house in the hope of selling you something is a scammer.
Anyone who tells you that you have won a lottery that you have not played is a scammer.
Anyone who offers goods and services "for free" is a scammer.
Anyone who takes money from a client for employment is a scammer.
Anyone who promises a 100% recovery from all diseases is a scammer.
Anyone who sends emails with get-rich-quick and easy recipes is a scammer.
And now - about the main thing.
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KANEMAN, DANIEL(Kahneman, Daniel) (b. in Tel Aviv 1934) - Israeli-American psychologist, one of the founders of psychological (behavioral) economic theory, winner of the Nobel Prize in Economics 2002 "for the use of psychological methodology in economic science, in particular - in the study formation of judgments and decision-making under conditions of uncertainty” (together with W. Smith).
The life of D. Kahneman vividly demonstrates the cosmopolitanism of modern scientists. Having begun his studies at the Hebrew University of Jerusalem (1954 - bachelor's degree in psychology and mathematics), Kahneman completed it already at the University of California, Berkeley (1961 - doctoral degree in psychology). Over the next 17 years, he taught at the Hebrew University of Jerusalem, combining this with work at a number of universities in the US and Europe (Cambridge, Harvard, Berkeley). Since the late 1970s, Kahneman has temporarily retired from work in Israel, engaging in joint scientific projects with American and Canadian scientists in research centers in these countries. Since 1993 he has been working as a professor at Princeton University in the USA, since 2000 he has been teaching again at the Hebrew University of Jerusalem in parallel.
Although D. Kahneman is a psychologist by education and profession, the award of the Prize to him. A. Nobel in Economics in 2002 caused approval among economists, who recognize the great importance of his works for economic science. Kahneman became the first Israeli and the second "non-economist" (after mathematician John Nash) to win the Nobel Prize in Economics.
The main object of Kahneman's research is the mechanisms of human decision-making in a situation of uncertainty. He proved that the decisions people make deviate significantly from what is prescribed by the standard economic model homo oeconomicus. Criticism of the "economic man" model was engaged even before Kahneman (one can recall, for example, Nobel laureates Herbert Simon and Maurice Allais), but it was he and his colleagues who first began to systematically study the psychology of decision making.
In 1979, the famous article appeared Prospect Theory: Analyzing Decision Making Under Risk, written by Kahneman in collaboration with psychology professor Amos Tversky (Jerusalem and Stanford Universities). The authors of this article, which marked the beginning of the so-called behavioral economics (behavioral economics), presented the results of a huge number of experiments in which people were asked to choose between different alternatives. These experiments proved that people cannot rationally estimate either the magnitude of expected gains or losses, or their probabilities.
First, it was found that people react differently to equivalent (in terms of gain/loss ratio) situations depending on whether they lose or win. This phenomenon is called asymmetric response to changes in wealth. A person is afraid of loss, i.e. his feelings from losses and gains are asymmetrical: the degree of satisfaction of a person from the acquisition of, for example, $ 100 is much lower than the degree of frustration from the loss of the same amount. Therefore, people are willing to take risks in order to avoid losses, but are not inclined to take risks in order to gain benefits. Second, experiments have shown that people are prone to error in estimating probability: they underestimate the likelihood of events that are most likely to occur and overestimate much less likely events. Scientists have discovered an interesting pattern - even mathematics students who know the theory of probability well do not use their knowledge in real life situations, but proceed from their stereotypes, prejudices and emotions.
Instead of decision theories based on the theory of probability, D. Kahneman and A. Tversky proposed a new theory - perspective theory(prospect theory). According to this theory, a normal person is not able to correctly assess future benefits in absolute terms, in fact, he evaluates them in comparison with some generally accepted standard, trying, first of all, to avoid worsening his position. Prospect theory can be used to explain many irrational actions of people that are inexplicable from the standpoint of "economic man".
According to the Nobel Committee, by demonstrating how badly people are able to predict the future, D. Kahneman "with sufficient reason called into question the practical value of the fundamental postulates of economic theory."
Of course, this is not the merit of Kahneman alone, a great supporter of scientific co-authorship. During the award, he candidly admitted that the honor of being awarded the Nobel Prize rarely reflects the contribution to science of one person. “This is especially true in my case, since I received the award for the work I did many years ago with my close friend and colleague Amos Tversky, who passed away in 1996. The thought of his absence on this day makes me very sad,” Kahneman said.
It is curious to note that the American economist Vernon Smith, who was awarded the Nobel Prize in Economics at the same time as Kahneman, is his constant opponent, arguing that experimental verification basically confirms (rather than refutes) the principles of rational behavior familiar to economists. The decision of the Nobel Committee to share the 2002 Prize in Economics equally between the critic and the defender of the model of a rational “economic man” is not only academically objective, but also a kind of irony over the situation in modern economics, where opposing approaches are approximately equally popular.
Proceedings: Tversky A., Kahneman D. Judgment under uncertainty: Heuristics and biases, 1974; Kahneman D., Tversky A. Prospect theory: An analysis of decisions under risk, 1979; Tversky A., Kahneman D. The framing of decisions and the psychology of choice, 1981; Kahneman D., Tversky A. The psychology of preferences, 1982; Kahneman D., Miller D.T. Norm theory: Comparing reality to its alternatives, 1986; Kahneman D. Experimental economics: A psychological perspective, 1987; Tversky A., Kahneman D. Advances in Prospect theory: Cumulative Representation of Uncertainty, 1992; Kahneman D., Wakker P., Sarin R. Back to Bentham? Explorations of Experienced Utility, 1997.
Natalia Latova
Kahneman received the Nobel Prize in Economics "for his application of psychological methods to economics." He was awarded in 2002 along with Vernon L. Smith (Vernon L. Smith). Kahneman is well known for his work on the psychology of evaluation and decision making, behavioral economics, and hedonic psychology. Together with other thinkers, including Amos Tversky, Kahneman established the cognitive basis for common human fallacies that stem from heuristics and biases. He also contributed to the development of prospect theory.
Daniel Kahneman was born in Tel Aviv on March 5, 1934, when his mother was visiting relatives. He spent his childhood in France (France), where his parents emigrated from Lithuania (Lithuania) in the early 1920s. Kahneman and his family were in Paris when the city was occupied by the Nazis in 1940. His father was captured during the first major roundup of French Jews, but was released after six weeks. The father's employer influenced the successful outcome. The family remained on the run for the remainder of the war. Daniel lost his father in 1994, who died due to problems caused by diabetes. In 1948, Kahneman arrived with his family in British Mandatory Palestine, just before the establishment of the State of Israel.
Kahneman received a Bachelor of Science degree in psychology from the Hebrew University of Jerusalem in 1954. He then worked in the psychological service of the Israel Defense Forces. Daniel's responsibilities included evaluating candidates for training at the officer training school, as well as developing tests.
In 1958, he went to the United States to earn a Ph.D. in psychology from the University of California at Berkeley. Kahneman's academic career began by lecturing in psychology at the Hebrew University of Jerusalem in 1961. He rose to senior lecturer in 1966. His early work focused on visual perception and attention.
In 1978, Kahneman went to work at the University of British Columbia (University of British Columbia).
As a member of Stanford University's Center for Advanced Study in the Behavioral Sciences from 1977-1978, Kahneman met Richard Thaler. They quickly became friends and had a significant impact on each other. Daniel and Richard both took an active part in developing a new approach to economic theory. Together with David Schkade, Kahneman developed the concept of "focusing the illusion" to partly explain the mistakes people make when evaluating the consequences of different scenarios for their future. This concept is also known as "affective forecasting", well studied by Daniel Gilbert.
Kahneman is currently Professor Emeritus of Psychology and Professor in the Department of Public Relations at the School of Public and International Relations. Woodrow Wilson at Princeton University (Woodrow Wilson School, Princeton University). Kahneman is a founding partner of the TGG Group consulting company. He is married to Anne Treisman, an attentional psychologist and Fellow of the Royal Society.
In 2011, Foreign Policy magazine named Kahneman one of the world's top thinkers. In the same year, his bestselling book, Thinking, Fast and Slow, was published, summarizing much of Kahneman's research.
