Daniel Kahneman was a psychologist who paved the way for theories of economic behavior. He won the Nobel Prize in Economics in 2002, along with Vernon Smith, “for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty.” He passed away at the age of 90.
He demonstrated that violations of economic rationality are not episodic but systematic. In this regard, he stated:
“The classical theory of choice sets a series of conditions of rationality that are perhaps necessary but hardly sufficient: they, in fact, allow us to define as rational many choices that are clearly foolish” (Kahneman 1994, p. 23). “No one has ever seriously believed that all human beings always hold rational beliefs and invariably make rational decisions. The principle of rationality is generally understood as an approximation, based on the belief (or hope) that deviations from rationality become rare when the stakes are high or tend to disappear altogether under the discipline of the market” (Kahneman 2003, p. 87).
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