In the mid-20th century psychologists in the developing field of cognitive psychology, such as Ward Edwards,1 Amos Tversky, and Daniel Kahneman began to compare their cognitive models of decision-making under risk and uncertainty with economic models of rational behaviour. In 1979, Kahneman and Tversky2 wrote an important paper that used cognitive psychology to explain various divergences of economic decision-making from neo-classical theory. They were the founders of prospect theory.
KeywordsEconomic Behaviour Prospect Theory Biological Base Behavioural Economic Rational Choice Theory
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