Daniel Kahneman, a psychologist, won the 2002 Nobel Memorial Prize in Economic Sciences for work that challenged a core assumption of economics: that people are consistently rational.
With Amos Tversky, he developed prospect theory, which showed that people value gains and losses differently — a loss hurts more than an equivalent gain feels good — and that we lean on mental shortcuts that produce predictable errors of judgement.
The findings helped launch behavioural economics, which folds real human psychology into models of saving, spending, investing and risk.
Why it matters: Kahneman showed that decisions under uncertainty follow patterns — irrational, but predictably so — that markets and policymakers ignore at their peril.
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