An approach to the understanding of human decision making. This volume presents an approach to the understanding of human decision making which is rooted in psychology, but is increasingly influential in economics and in theories of management and business. Preface ix List of Contributors xix Choices, Values, and Frames 1(16) Daniel Kahneman Amos Tversky PART ONE. PROSPECT THEORY AND EXTENSIONS Prospect Theory: An Analysis of Decision under Risk 17(27) Daniel Kahneman Amos Tversky Advances in Prospect Theory: Cumulative Representation of Uncertainty 44(23) Amos Tversky Daniel Kahneman PART TWO. THE UNCERTAINTY EFFECT AND THE WEIGHTING FUNCTION Compound Invariant Weighting Functions in Prospect Theory 67(26) Drazen Prelec Weighing Risk and Uncertainty 93(25) Amos Tversky Craig R. Fox A Belief-Based Account of Decision under Uncertainty 118(25) Craig R. Fox Amos Tversky PART THREE. LOSS AVERSION AND THE VALUE FUNCTION Loss Aversion in Riskless Choice: A Reference-Dependent Model 143(16) Amos Tversky Daniel Kahneman Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias 159(12) Daniel Kahneman Jack L. Knetsch Richard H. Thaler The Endowment Effect and Evidence of Nonreversible Indifference Curves 171(9) Jack L. Knetsch A Test of the Theory of Reference-Dependent Preferences 180(22) Ian Bateman Alistair Munro Bruce Rhodes Chris Starmer Robert Sugden Diminishing Marginal Utility of Wealth Cannot Explain Risk Aversion 202(7) Matthew Rabin PART FOUR. FRAMING AND MENTAL ACCOUNTING Rational Choice and the Framing of Decisions 209(15) Amos Tversky Daniel Kahneman Framing, Probability Distortions, and Insurance Decisions 224(17) Eric J. Johnson John Hershey Jacqueline Meszaros Howard Kunreuther Mental Accounting Matters 241(28) Richard H. Thaler PART FIVE. APPLICATIONS Toward a Positive Theory of Consumer Choice 269(19) Richard H. Thaler Prospect Theory in the Wild: Evidence from the Field 288(13) Colin F. Camerer Myopic Loss Aversion and the Equity Premium Puzzle 301(16) Shlomo Benartzi Richard H. Thaler Fairness as a Constraint on Profit Seeking: Entitlements in the Market 317(18) Daniel Kahneman Jack L. Knetsch Richard H. Thaler Money Illusion 335(21) Eldar Shafir Peter Diamond Amos Tversky Labor Supply of New York City Cab Drivers: One Day at a Time 356(15) Colin F. Camerer Linda Babcock George Loewenstein Richard H. Thaler Are Investors Reluctant to Realize Their Losses? 371(22) Terrance Odean Timid Choices and Bold Forecasts: A Cognitive Perspective on Risk Taking 393(21) Daniel Kahneman Dan Lovallo Overconfidence and Excess Entry: An Experimental Approach 414(10) Colin F. Camerer Dan Lovallo Judicial Choice and Disparities between Measures of Economic Values 424(27) David Cohen Jack L. Knetsch Contrasting Rational and Psychological Analyses of Political Choice 451(22) George A. Quattrone Amos Tversky Conflict Resolution: A Cognitive Perspective 473(16) Daniel Kahneman Amos Tversky PART SIX. THE MULTIPLICITY OF VALUE: REVERSALS OF PREFERENCE The Construction of Preference 489(14) Paul Slovic Contingent Weighting in Judgment and Choice 503(15) Amos Tversky Shmuel Sattath Paul Slovic Context-Dependent Preferences 518(10) Amos Tversky Itamar Simonson Ambiguity Aversion and Comparative Ignorance 528(15) Craig R. Fox Amos Tversky Attribute Evaluability: Its Implications for Joint-Separate Evaluation Reversals and Beyond 543(22) Christopher K. Hsee PART SEVEN. CHOICE OVER TIME Preferences for Sequences of Outcomes 565(13) George F. Loewenstein Drazen Prelec Anomalies in Intertemporal Choice: Evidence and an Interpretation 578(19) George Loewenstein Drazen Prelec PART EIGHT. ALTERNATIVE CONCEPTIONS OF VALUE Reason-Based Choice 597(23) Eldar Shafir Itamar Simonson Amos Tversky Value Elicitation: Is There Anything in There? 620(22) Baruch Fischhoff Economic Preferences or Attitude Expressions? An Analysis of Dollar Responses to Public Issues 642(31) Daniel Kahneman Ilana Ritov David Schkade PART NINE. EXPERIENCED UTILITY AND OBJECTIVE HAPPINESS Experienced Utility and Objective Happiness: A Moment-Based Approach 673(20) Daniel Kahneman Evaluation by Moments: Past and Future 693(16) Daniel Kahneman Endowments and Contrast in Judgments of Well-Being 709(17) Amos Tversky Dale Griffin A Bias in the Prediction of Tastes 726(9) George Loewenstein Daniel Adler The Effect of Purchase Quantity and Timing on Variety-Seeking Behavior 735(23) Itamar Simonson New Challenges to the Rationality Assumption 758(17) Daniel Kahneman References 775(46) Author Index 821(11) Subject Index 832