Kahneman-Tversky framework

The Kahneman-Tversky Framework, developed by psychologists Daniel Kahneman and Amos Tversky, explores how people make decisions under uncertainty. It highlights that humans often rely on mental shortcuts, or "heuristics," which can lead to systematic errors, known as biases. For example, individuals may overestimate the likelihood of dramatic events because they are more memorable. This framework helps explain why people sometimes act irrationally in economic and everyday decisions, emphasizing the role of psychology in decision-making processes rather than relying solely on logical reasoning. Understanding these patterns can improve decision-making and risk assessment.