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Are People Probabilistically Challenged?, Alex Stein

Michigan Law Review

Daniel Kahneman's recent book, Thinking, Fast and Slow, is a must-read for any scholar or policymaker interested in behavioral economics. Behavioral economics is a young, but already well-established, discipline that pervasively affects law and legal theory. Kahneman, a 2002 Nobel Laureate, is the discipline's founding father. His pioneering work with Amos Tversky and others challenges the core economic concept of expected utility, which serves to determine the value of people's prospects. Under mainstream economic theory, the value of a person's prospect equals the prospect's utility upon materialization (U) multiplied by the probability of the prospect materializing (P). When the prospect …