New research into judgment and decision-making uncertainty – prospect theory

For having integrated insights from psychological research into economic science, especially concerning human judgment and decision making under uncertainty, Daniel Kahneman, who discovered the new field of behavioral economics, was awarded the 2002 Nobel prize in economics. The paper illustrates the systematic bias between reality decision and prediction of classic economic theory. The author elaborates the new model of Prospect Theory proposed by Kahneman and discusses the extensive field in which the theory can be used.