The Prize in Economic Sciences 2002 – Press release

Claims Supported by This Source

1. The 2002 prize went to Daniel Kahneman (for integrating insights from psychology into economics, especially concerning judgment and decision-making under uncertainty) and Vernon L. Smith (for establishing laboratory experiments as a tool in empirical economic analysis).
2. Traditional economics has been based on the premise of "Homo economicus," who acts out of self-interest and makes rational decisions.
3. Kahneman showed that human decisions under uncertainty systematically deviate from the predictions of standard economic theory and, together with Amos Tversky (d. 1996), formulated prospect theory.
4. Human judgment can take shortcuts (heuristics) that systematically deviate from the basic principles of probability.
5. Smith demonstrated through experiments the importance of market institutions, such as how the choice of auction format affects the revenue a seller can expect.

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