The science behind human irrationality just passed a huge test

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EXCERPT: Kahneman and Tversky’s earthquake observations about human decision-making, called “prospect theory,” have found their way into policy, business, and health care. It’s prospect theory that earned Daniel Kahneman his Nobel Prize and prospect theory that underlies famous concepts like loss aversion-the tendency people have to weigh losses more heavily than gains.

[...] If you won $100 tomorrow, you’d be pretty happy. And if you lost $100, you’d be less than thrilled. But those two feelings wouldn’t be the same in magnitude: the loss would probably sting far more than the gain would delight. People don’t approach things like loss and risk as purely rational agents. We weigh losses more heavily than gains. We feel like the difference between 1 percent and 2 percent is bigger than the difference between 50 percent and 51 percent. This observation of our irrationality is one of the most influential concepts in behavioral science: skyscrapers of research have been built on Daniel Kahneman and Amos Tversky’s foundational 1979 paper that first described the paradoxes of how people make decisions when faced with uncertainty.

So when researchers raised questions about the foundations of those skyscrapers, it caused alarm. A large team of researchers set out to check whether the results of Kahneman and Tversky’s crucial paper would replicate if the same experiment were conducted now. Behavioral scientists can heave a sigh of relief: the original results held up, and robustly. With more than 4,000 participants in 19 countries, nearly every question in the original paper was answered the same way by people today as they were by their 1970s counterparts.

“It would have been shocking, earth-shaking shocking, if [the results] had failed to replicate,” says Brian Nosek, a psychologist who focuses on replications and transparency in science and who wasn’t involved in this replication. (MORE - details)

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