Kahneman and Tversky concluded that people
A) maximize their expected utility by multiplying it by probabilities
B) use probability weights in place of raw probabilities
C) process probabilities in an unbiased and unemotional manner

Question

Quizplus · Accepted Answer

Kahneman and Tversky's work on prospect theory showed that people don't necessarily make decisions based on raw probabilities, but rather on subjective probability weights that are influenced by factors such as emotions, framing, and heuristics. Therefore, choice B) is the correct answer. Choice A) is incomplete and not entirely accurate, as maximizing expected utility is only one aspect of their theory. Choice C) is also incorrect, as their work showed that people do not process probabilities in an unbiased and unemotional manner.

Kahneman and Tversky Concluded That People