ABSTRACT
The human understanding when it has once adopted an opinion draws all things else to support and agree with it. And though there be a greater number and weight of instances to be found on the other side, yet these it either negates or despises in order that by this great and pernicious predetermination the authority of its former conclusions may remain inviolate. Amos Tversky and Daniel Kahneman went on to win a Nobel Prize for their work in applying insights from psychology to economic theory, particularly in decision making in times of uncertainty. They studied how the rational brain — or, more accurately, the irrational brain — can distort our perspective and influence our emotions. People do not “maximize utility.” Tversky and Kehneman developed Prospect Theory, an alternate view of decision making based in psychology that identifies how these biases affect our choices.
