We all make mistakes. No matter how well trained, smart, or astute we are, faulty reasoning marks our thinking and leads us astray. The psychologists Amos Tversky and Daniel Kahneman showed us just how predictable our errors are. Coming together and breaking up across decades, these fervent collaborators changed the way we think. And the way we think about our thinking.
Tverysky and Kahneman challenged the idealized view of human rationality that pervaded economics. Only a few economists questioned the usefulness—let alone the varacity—of the assumption that individuals could perfectly calculate the costs and benefits of a course of action. Kahneman and Tversky probed the accepted wisdom, developed alternative hypotheses, and then tested them.
Their findings turned economics’ founding notion on its head. Cognitive illusions and predictable errors define human thinking, they learned. We live in an uncertain and complex world, and our most reasoned conclusions can be shaky. Tversky and Kahneman’s, based in rigorous science, are not. Their work has given us tools to make better judgments and, where we fall short, to understand the imperfect choices we make.
In The Undoing Project, Michael Lewis tells the story of their fertile and passionate friendship. Like all romances, Kahneman and Tversky’s had its ups and downs. The ups produced a brand new way of reading the world. The downs led to a rift in the partnership, one that was mended before Tversky’s death. Tversky and Kahneman’s partnership makes for good storytelling. The protagonists, their fraught relationship, and their brilliant insights keep the pages turning. Lewis keeps his lens focused narrowly on the two men, but this narrative strategy comes at a cost. To understand what sparks discovery, we need to employ a wider view. Innovative social science depends on a large network of inventive, open-minded scientists, whose past research provides the launching pad and whose future research ensures the legacy.
Kahneman and Tversky are most famous for prospect theory, which is based on the insight that “When choosing between sure things and gambles, people’s desire to avoid loss exceeded their desire to secure gain.” Another way to put this is that the appeal of the happiness derived from getting something you seek is trumped by aversion to the unhappiness derived from losing it. They determined that individual decisions reflected a comparison not simply of higher and lower numbers, as in the theory of expected utility, but rather of whether a person perceived herself to be better or worse off in relation to her reference point. Indeed, the very perception of risk differs when considering losses versus gains. Additionally, they demonstrated that emotion was as important as reason in the determination of probabilities.
Choices, it seems, are highly manipulable by varying perceptions of the reference point or by appealing to emotions. Alternative framings of the probabilities affect the choices even when the probabilities are exactly the same in all of the alternatives. As Lewis states, “People did not choose between things. They chose between descriptions of things.”
The transformative effect on economics was recognized by the Nobel Committee when it awarded its prize in economics to Kahneman in 2002, six years after Tversky’s untimely death. Indeed, their work has altered all the social sciences. But the pair’s influence is also felt in business, government, professional sports, in all the locations where there are high stakes and choices made under conditions of uncertainty. Lewis begins his book by revealing how the kind of reasoning he described so admiringly in Moneyball, The Big Short, and other of his writings was in fact based on Tversky and Kahneman’s work, even though neither he nor most of those he profiled had a clue this was the case.
Kahneman and Tversky challenged each other, laughed with each other, but most importantly they stimulated each other’s imaginations.
Learning how Kahneman and Tversky made their discoveries is as instructive as understanding what they accomplished. Their sustained and synergistic interactions enabled them to think together in ways neither could have thought alone. These two challenged each other, laughed with each other, but most importantly they stimulated each other’s imaginations. They continually uncovered puzzles from their observations of human behavior, puzzles that became the stuff of research questions few had asked before them. Lewis turns their collaborative research into adventure stories, illuminating how they arrived at a solution to a puzzle that was a piece of the larger answer they sought.
Both their commonalities and their differences drew them together. As Israelis who were children during the Holocaust, they willingly served in the military more than once. They personally understood risk and uncertainty and were alert to the serious consequences—including death—of bad judgment. Both were members of Hebrew University’s relatively young psychology department, a department struggling to find its feet in Israel and its place in the world. Their childhood friends, military buddies, and university colleagues formed a multidisciplinary and interconnected world of elite academics in a small country. Both Kahneman and Tversky were intellectually ambitious, eager to advance knowledge as well as to make a mark beyond the confines of their young nation’s new university.
Despite their similarities, they each brought some distinctive experiences to the relationship. Kahneman spent his youth in Europe; Tversky in British Mandatory Palestine. They came to psychology by different routes: Kahneman initially focused on visual perception and attention while Tversky engaged with mathematics and formal models. Kahneman tended to be aloof; Tversky liked to joke and prank. In Lewis’s account, they began to find each other seriously interesting when Kahneman did something unheard of for him: he invited another faculty member—Tversky—to give a lecture in his class on statistical and probabilistic thinking.
Their growing celebrity increased their dependence on each other—but not just each other. They were backed up by a star-studded cast who brought other talents and insights into the mix. Although Tversky and Kahneman made major breakthroughs and helped generate several significant research programs, they were successful in large part because of the wider communities in which they participated.
As director of the Center for Advanced Study in the Behavioral Sciences (CASBS) at Stanford University, I was pleased to learn how much CASBS was a major node in their network. Each of them spent a year at the Center during a crucial moment in their partnership, interacting with others at CASBS and at Stanford. The Undoing Project mentions nearly 30 other former fellows in its pages. Among them are eminent psychologists Walter Mischel, who was chair of Stanford’s psychology department when it hired Tversky, and Ann Treisman, whose work was foundational for some of theirs and later became Kahneman’s wife. Economist Richard Thaler developed behavioral economics as a result of his interaction with the two of them on the CASBS hill in 1977–78, and 20 years later gathered a group of like-minded psychologists and economists together at the Center to strengthen their program. So many other scholars also played key roles, and Lewis describes a number of them.
Kahneman and Tversky’s success demonstrates the power of just what CASBS was established to do: stimulate synergies, collaborations, and new ways of thinking and doing research. But the takeaway is far broader than the value of one center that encourages collaborative, ongoing research programs. The process that produced Tversky and Kahneman’s groundbreaking contributions reveals the possibilities inherent not only in the best partnerships but also in larger research networks that permit multiple sources of ideas and challenge.
The complexity of understanding social science problems requires—more often than not—a team of people bringing a variety of perspectives and skills to bear. Kahneman and Tversky responded to and undid theories and arguments that predated them. To do so they drew both on their own considerable talents and on other first-rate minds and work in psychology, mathematics, statistics, decision theory, medicine, and economics. Their creativity and originality depended on their special symbiosis but was fueled by interactions with others. Collaboration between close colleagues is the start, yes. The real story, however, lies beyond, in the networks that bridge disciplinary divides in the service of discoveries that matter. 
