CHOICES, VALUES,
AND FRAMES
Edited by
DANIEL KAHNEMAN
Princeton University
A M O S TVERSKY
Stanford University
Russell Sage Foundation
ffl| CAMBRIDGE
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UNIVERSITY PRESS
Contents
Preface
List of Contributors
)(l
Choices, Values, and Frames
Daniel Kahneman and Arnos Tversky
vage ix
xix
1
PART ONE. PROSPECT THEORY AND EXTENSIONS
2
Prospect Theory: An Analysis of Decision under Risk
Daniel Kahneman and Arnos Tversky
3
Advances in Prospect Theory: Cumulative Representation
of Uncertainty
Arnos Tversky and Daniel Kahneman
17
44
PART TWO. THE UNCERTAINTY EFFECT AND THE WEIGHTING
FUNCTION
4
Compound Invariant Weighting Functions in Prospect Theory
Drazen Prelec
67
5
Weighing Risk and Uncertainty
Arnos Tversky and Craig R. Fox
93
6
A Belief-Based Account of Decision under Uncertainty
Craig R. Fox and Arnos Tversky
118
PARTTHREE. LOSS AVERSION AND THE VALUE FUNCTION
7
8
9
Loss Aversion in Riskless Choice: A Reference-Dependent
Model
Arnos Tversky and Daniel Kahneman
143
Anomalies: The Endowment Effect, Loss Aversion,
and Status Quo Bias
Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler
159
The Endowment Effect and Evidence of Nonreversible
Indifference Curves
Jack L. Knetsch
171
vi
Contents
10
A Test of the Theory of Reference-Dependent Preferences
Ian Bateman, Alistair Munro, Bruce Rhodes, Chris Stürmer,
and Robert Sugden
11
Diminishing Marginal Utility of Wealth Cannot Explain
Risk Aversion
Matthew Rabin
180
202
PARTFOUR. FRAMING AND MENTAL ACCOUNTING
\ 12
'\
Rational Choice and the Framing of Decisions
Arnos Tversky and Daniel Kahneman
209
V 13
Framing, Probability Distortions, and Insurance Decisions
Eric J. Johnson, John Hershey, Jacqueline Meszaros,
and Howard Kunreuther
224
Mental Accounting Matters
Richard H. Thaler
241
14
PART FIVE. APPLICATIONS
15
Toward a Positive Theory of Consumer Choice
Richard H. Thaler
269
16
Prospect Theory in the Wild: Evidence f rom the Field
Colin F. Camerer
288
17
Myopie Loss Aversion and the Equity Premium Puzzle
Shlomo Benartzi and Richard H. Thaler
301
18
Fairness as a Constraint on Profit Seeking: Entitlements
in the Market
Daniel Kahneman, Jack L. Knetsch, and Richard H. Thaler
317
19
Money Illusion
Eldar Shafir, Peter Diamond, and Arnos Tversky
335
20
Labor Supply of New York City Cab Drivers: One Day at a Time
Colin E Camerer, Linda Babcock, George Loewenstein,
and Richard H. Thaler
356
21
Are Investors Reluctant to Realize Their Losses?
Terrance Odean
371
22
Timid Choices and Bold Forecasts: A Cognitive Perspective
on Risk Taking
Daniel Kahneman and Dan Lovallo
23
Overconfidence and Excess Entry: An Experimental Approach
Colin F. Camerer and Dan Lovallo
24
Judicial Choice and Disparities between Measures
of Economic Values
David Cohen and Jack L. Knetsch
393
414
424
Contents
25
26
Contrasting Rational and Psychological Analyses
of Political Choice
George A. Quattrone and Arnos Tversky
Conflict Resolution: A Cognitive Perspective
Daniel Kahneman and Arnos Tversky
vii
451
473
PART SIX. THE MULTIPLICITY OF VALUE: REVERSALS
OF PREFERENCE
27
The Construction of Preference
Paul Slovic
489
28
Contingent Weighting in Judgment and Choice
Arnos Tversky, Shmuel Sattath, and Paul Slovic
503
29
Context-Dependent Preferences
Arnos Tversky and Itamar Simonson
518
30
Ambiguity Aversion and Comparative Ignorance
Craig R. Fox and Arnos Tversky
528
31
Attribute Evaluability: Its Implications f or Joint-Separate
Evaluation Reversais and Beyond
Christopher K. Hsee
543
PART SEVEN. CHOICE OVER TIME
32
Preferences for Sequences of Outcomes
George F. Loewenstein and Drazen Prelec
33
Anomalies in Intertemporal Choice: Evidence and
an Interpretation
George Loewenstein and Drazen Prelec
565
578
PART EIGHT. ALTERNATIVE CONCEPTIONS OF VALUE
34
Reason-Based Choice
Eldar Shafir, Itamar Simonson, and Arnos Tversky
597
35
Value Elicitation: Is There Anything in There?
Baruch Fischhoff
620
36
Economic Preferences or Attitüde Expressions?
An Analysis of Dollar Responses to Public Issues
Daniel Kahneman, Ilana Ritov, and David Schkade
642
PARTNINE.EXPERIENCED UTILITY AND OBJECTIVE HAPPINESS
37
Experienced Utility and Objective Happiness:
A Moment-Based Approach
Daniel Kahneman
673
viii
Contents
38
Evaluation by Moments: Past and Future
Daniel Kahneman
693
39
Endowments and Contrast in Judgments of Well-Being
Arnos Tversky and Dale Griffin
709
40
A Bias in the Prediction of Tastes
George Loewenstein and Daniel Adler
726
41
The Effect of Purchase Quantity and Timing on Variety-Seeking
Behavior
Itamar Simonson
42
735
New Challenges to the Rationality Assumption
Daniel Kahneman
758
References
775
Author Index
821
Subject Index
832