Daniel KahnemanIn the process of researching the impediments to sound decision-making, I have come upon frequent references to Daniel Kahneman not surprising since Kahneman work on decision-making earned him the 2002 Royal Swedish Bank Prize in Economic Sciences in Memory of Alfred Nobel (shared with Vernon Smith).1
Kahneman, a professor of psychology and public affairs at Princeton's Woodrow Wilson School, was cited by the Royal Swedish Academy of Sciences "for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty." In their press release, the Academy go on to note that
Kahneman has also discovered how human judgment may take heuristic shortcuts that systematically depart from basic principles of probability. His work has inspired a new generation of researchers in economics and finance to enrich economic theory using insights from cognitive psychology into intrinsic human motivation.The Spring 2007 issue of Rotman Magazine contains a good interview Karen Christensen conducted with Kahneman as part of the issue's focus on risk. You can download the entire issue here. (pdf)
The full interview is worth reading. I'd particularly note Kahneman's response to Christensen's question about how organizations should deal with the all-too-common problem of business people not learning from their mistakes. Kahneman considers systematically evaluating decisions in order to determine why they did or did not pan out as key to steadily improving the quality of decisions. He highly recommends that executives get over their reluctance to be second-guessed. Doing so would enable a substantial increase in how much their organizations learn from experience.
1 Kahneman collaborated closely with Amos Tversky, who died in 1996. Princeton provides a summary of Kahneman's work here. You can read Kahneman's Prize Lecture, delivered December 8, 2002, at Aula Magna, Stockholm University, here (pdf). Vernon Smith is a professor of economics and law at George Mason University.