Amos Tversky

Definition

Amos Tversky was a prominent cognitive psychologist known for his groundbreaking work on decision-making, particularly in relation to how people evaluate risk and uncertainty. His collaboration with Daniel Kahneman led to the development of prospect theory, which highlights how framing effects influence choices under risk. Tversky's research illuminated the cognitive biases that affect human behavior, showcasing how individuals often rely on mental shortcuts or heuristics in decision-making processes.

5 Must Know Facts For Your Next Test

1. Tversky, along with Kahneman, proposed prospect theory in 1979, which describes how people make choices in situations involving risk.
2. One of Tversky's key contributions is the identification of various cognitive biases that emerge from the use of heuristics.
3. Tversky's work showed that people tend to overweight small probabilities while underweighting larger probabilities when making decisions.
4. The framing effect demonstrated by Tversky illustrates how different presentations of the same scenario can lead to different choices.
5. Tversky's research has had a profound impact on fields beyond psychology, including economics, marketing, and public policy.

Review Questions

• How did Amos Tversky's collaboration with Daniel Kahneman contribute to our understanding of decision-making under risk?
  • Amos Tversky's collaboration with Daniel Kahneman was pivotal in developing prospect theory, which changed how we view decision-making under risk. Their research revealed that people do not always act rationally when faced with uncertainty; instead, they are influenced by cognitive biases and heuristics. This partnership highlighted the importance of framing effects in decisions, demonstrating that the way choices are presented can significantly alter people's preferences and outcomes.
• Discuss the implications of Tversky's work on heuristics for business decision-making and consumer behavior.
  • Tversky's research on heuristics has important implications for business decision-making and understanding consumer behavior. By recognizing that people often rely on mental shortcuts, businesses can better tailor their marketing strategies to align with these biases. For instance, using framing techniques to present products or services can influence consumer choices by emphasizing gains rather than losses, ultimately guiding purchasing decisions more effectively.
• Evaluate the lasting impact of Amos Tversky's findings on modern economics and behavioral science, especially regarding risk assessment.
  • The impact of Amos Tversky's findings on modern economics and behavioral science is substantial, particularly in risk assessment. His insights challenged traditional economic theories that assumed rational decision-making. By incorporating psychological factors into economic models, Tversky’s work paved the way for behavioral economics, which examines how emotional and cognitive factors influence economic decisions. This shift has led to more effective strategies in finance, policy-making, and marketing that consider real human behavior rather than idealized rationality.

Related terms

Heuristics: Mental shortcuts that simplify decision-making by allowing individuals to make judgments quickly and efficiently, often leading to cognitive biases.

Loss Aversion: A concept from prospect theory that describes how people tend to prefer avoiding losses over acquiring equivalent gains, making losses feel more significant.

Framing Effect: A cognitive bias where people's decisions are influenced by the way information is presented, rather than just the information itself.