The report for Behavioral and Experimental Economics - Book Report/Review Example

These have been the main divisions or theories that the researcher has used to highlight the distinctive and characteristic features as defined in the book. The writer has used two systems to compile and deliver the findings from the research. The first version is emotional and more instinctive in its directives and assertions while the second is slower and more deliberative. This paper looks at how the different theories and perspectives as explained in the book can be applied in other aspects of life.

The main theme in the book is human irrationality where Kahneman with the help of Tversky devised three essential phases to his career. In the first phase the two conduct tests that revealed cognitive biases in the reasoning of human beings (Kahneman 34). In this research they found that there are some cognitive biases that affect the unconscious mind and in turn lead to errors that distort a person’s judgment. The research highlights the anchoring effect as one of the typical examples of the cognitive biases experienced by human.

While conducting a research to show this effect they gave an example of how a judge can give a longer sentence to an individual after rolling out a dice with a high number. In the second phase, Khaneman and Tversky aimed to show that people do not necessary only look to maximize utility as explained by the economic models. In this phase the book explains how other factors determine human behavior and not necessarily the ways explained in the economic models. It is through this concept that the two later developed an alternative approach that they named the prospect theory that was the theory associated with the economic Nobel prize in economics that Kahneman received.

After the second phase they later developed the third phase that was termed as the Hedonic psychology. This is referred to as the science of happiness and the causes and nature of happiness. Before embarking on this research Kahnemann had been evaluating