The work of Danny Kahneman is truly impressive. He was not just a prolific writer who put psychology back into economics, but the breadth of his work is astounding. Here is just a list of some of his major accomplishments.
Hat tip to Charles-Henry Monchau of Syz private bank for compiling the list:
1. System 1 and system 2 thinking - (fast versus slow / subconscious conscious, error-prone versus reliable). This is the basis for his most important book.
2. Investor irrationality - There were many others working in this area but his focus on decision bias change the direction on thinking that we always act rationally.
3. Prospect theory - This was, by far, his most important theoretical achievement.
4. The Halo effect - If we see the good in one part of a company, we will think it applies more broadly.
5. Availability heuristic - We will focus on information that vivid or readily available.
6. The fallacy of sunk costs - This is well know, but the psychological research tell us we cannot avoid it.
7. The confirmation bias - we always look for information that will justify or actions or decisions.
8. The hindsight bias - Of course, I know that there were behavioral biases, and the efficient markets hypothesis was wrong.
9. The framing bias - This bias leads to the major idea that we can nudge individuals to make better or at least different decisions.
10. The anchoring effect - We don't want to give up what we already hold.
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