Thirty Years of Prospect Theory in Economics: A Review and Assessment

Nicholas C. Barberis

No 18621, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Prospect theory, first described in a 1979 paper by Daniel Kahneman and Amos Tversky, is widely viewed as the best available description of how people evaluate risk in experimental settings. While the theory contains many remarkable insights, economists have found it challenging to apply these insights, and it is only recently that there has been real progress in doing so. In this paper, after first reviewing prospect theory and the difficulties inherent in applying it, I discuss some of this recent work. While it is too early to declare this research effort an unqualified success, the rapid progress of the last decade makes me optimistic that at least some of the insights of prospect theory will eventually find a permanent and significant place in mainstream economic analysis.

JEL-codes: D03 D81 G02 (search for similar items in EconPapers)
Date: 2012-12
New Economics Papers: this item is included in nep-cbe, nep-evo, nep-his, nep-hpe, nep-mic and nep-upt
Note: AP
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published as Barberis, Nicholas C. 2013. "Thirty Years of Prospect Theory in Economics: A Review and Assessment." Journal of Economic Perspectives, 27(1): 173-96. DOI: 10.1257/jep.27.1.173

Downloads: (external link)
http://www.nber.org/papers/w18621.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:18621

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w18621

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().