Thinking, Fast and Slow - Daniel Kahneman

actual losses and foregone gains: David Cohen and Jack L. Knetsch, “Judicial Choice and
Disparities Between Measures of Economic Value,” Osgoode Hall Law Review 30 (1992):
737–70. Russell Korobkin, “The Endowment Effect and Legal Analysis,” Northwestern
University Law Review 97 (2003): 1227–93.
asymmetrical effects on individual well-being: Zamir, “Law and Psychology.”
29: The Fourfold Pattern
and other disasters: Including exposure to a “Dutch book,” which is a set of gambles that your
incorrect preferences commit you to accept an { to>
puzzle that Allais constructed: Readers who are familiar with the Allais paradoxes will
recognize that this version is new. It is both much simpler and actually a stronger violation
than the original paradox. The left-hand option is preferred in the first problem. The second
problem is obtained by adding a more valuable prospect to the left than to the right, but the
right-hand option is now preferred.
sorely disappointed: As the distinguished economist Kenneth Arrow recently described the
event, the participants in the meeting paid little attention to what he called “Allais’s little
experiment.” Personal conversation, March 16, 2011.
estimates for gains: The table shows decision weights for gains. Estimates for losses were very
similar.
estimated from choices: Ming Hsu, Ian Krajbich, Chen Zhao, and Colin F. Camerer, “Neural
Response to Reward Anticipation under Risk Is Nonlinear in Probabilities,” Journal of
Neuroscience 29 (2009): 2231–37.
parents of small children: W. Kip Viscusi, Wesley A. Magat, and Joel Huber, “An
Investigation of the Rationality of Consumer Valuations of Multiple Health Risks,” RAND
Journal of Economics 18 (1987): 465–79.
psychology of worry: In a rational model with diminishing marginal utility, people should pay
at least two-thirds as much to reduce the frequency of accidents from 15 to 5 units as they are
willing to pay to eliminate the risk. Observed preferences violated this prediction.
not made much of it: C. Arthur Williams, “Attitudes Toward Speculative Risks as an Indicator
of Attitudes Toward Pure Risks,” Journal of Risk and Insurance 33 (1966): 577–86. Howard
Raiffa, Decision Analysis: Introductory Lectures on Choices under Uncertainty (Reading, MA:
Addison-Wesley, 1968).
shadow of civil trials: Chris Guthrie, “Prospect Theory, Risk Preference, and the Law,”
Northwestern University Law Review 97 (2003): 1115–63. Jeffrey J. Rachlinski, “Gains,
Losses and the Psychology of Litigation,” Southern California Law Review 70 (1996): 113–85.