Daniel Kahneman won the Nobel Prize in Economic Sciences in 2002 for which of the following theory?

Solution

Daniel Kahneman's theory is Prospect Theory, for which he won the Nobel Prize in Economic Sciences in 2002.He introduced thus theory along with Amos Tversky. The theory deals with human judgment and decision-making. As per the theory, given the choice of equal probabilities, most people would choose to retain the wealth that they already have, rather than risk the chance to increase their current wealth. People are usually averse to the possibility of losing, such that they would rather avoid a loss rather than take a risk to make an equivalent gain. It is a psychology theory that describes how people make decisions when presented with alternatives that involve risk, probability, anduncertainty. It holds that people make decisions based on perceived losses or gains. Kahneman won the Nobel Prize for his work in integrating psychology into economics, particularly how human decision-making impacts economic decisions in times of uncertainty.