Risky Business – Our Illogical Attitudes to Risk, Regret, and Gambling [PRO]

We’ve been featuring aspects of Daniel Kahneman’s brilliant book, Thinking Fast and Slow, over a number of articles looking at his concepts such as Priming and Anchoring, and in particular what they (and other ideas he and others in the field have developed) mean for procurement professionals. Kahneman won the Nobel Prize for Economics, with his collaborator Amos Tverksy – not bad going for two psychologists. And the work that led to the prize was largely around the area of risk, which is what we will look at today. He and Tversky showed that the assumptions economists made about human behaviour – that we acted rationally in hard economic terms – could be proved false. That meant many of the standard economic models and theories were also flawed, which rather upset many in the economics community!

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