A Presentation on Management Guru:

DANIEL KAHNEMANN

Presented by:
KavyaShree.M Raghavendra.S Manjunath.C Monika.M.D

Management Guru DANIEL KAHNEMANN

Born March 5, 1934 (age 78) Tel Aviv, Mandatory Palestine Residence United States Nationality American, Israel Fields Psychology, economics Institutions Princeton University 1993 University of California, Berkeley1986 93 University of British Columbia197886 Hebrew University of Jerusalem196177 )

Known as Father of Psychology

A field known as "behavioral finance" has evolved that attempts to better understand and explain how emotions and cognitive errors influence investors and the decision-making process.

Psychology of judgment and Decision-making,

Hedonic Psychology Behavioral economics Cognitive biases

Hedonic psychology
In the nineties, Kahneman's research focus began to gradually shift in emphasis towards the field of "hedonic psychology." This subfield is closely related to the positive psychology movement, which was steadily gaining in popularity at the time. According to Kahneman and colleagues, "Hedonic psychology...is the study of what makes experiences and life pleasant or unpleasant. It is concerned with feelings of pleasure and pain, of interest and boredom, of joy and sorrow, and of satisfaction and dissatisfaction.

Cognitive psychology
Kahneman began his academic career as a lecturer in psychology at the Hebrew University of Jerusalem in 1961. He was promoted to senior lecturer in 1966. His early work focused on visual perception and attention

Notable awards/Achievements
APA Lifetime Achievement Award (2007) Nobel Memorial Prize in Economic Sciences (2002) APS Distinguished Scientific Contribution Award (1982) In 2011, he was named by Foreign Policy magazine to its list of top global thinkers.[1] In the same year, his book Thinking, Fast and Slow, which summarizes much of his research, was published and became a best seller.

Notable Contributions in the field of Behavioral finance are:

-FRAMING(economics) - Loss aversion

- Mental accounting
- Availability - Optimism bias

FRAMING(economics)
Framing in the social sciences refers to a set of concepts and theoretical perspectives on how individuals, groups, and societies organize, perceive, and communicate about reality. Framing is commonly used in media studies, sociology, psychology, and political science

Framing bias notes the tendency of decision makers to respond to various situations differently based on the context in which a choice is presented (framed). A decision frame is the decision makers subjective conception of the acts, outcomes, and contingencies associated with a particular choice.

Loss aversion
In economics and decision theory, loss aversion refers to people's tendency to strongly prefer avoiding losses to acquiring gains. Some studies suggest that losses are twice as powerful, psychologically, as gains. Loss aversion was first convincingly demonstrated by Amos Tversky and Daniel Kahneman. This leads to risk aversion when people evaluate a possible gain; since people prefer avoiding losses to making gains.

Mental accounting bias

Mental accounting bias can cause investors to irrationally distinguish between returns derived from income and those derived from capital appreciation. Many people feel the need to preserve capital (i.e., principal) sums and prefer to spend interest. As a result, some investors chase income streams and can unwittingly erode principal in the process

AVAILABILITY BIAS
Availability bias is a rule of thumb, or mental shortcut, that allows people to estimate the probability of an outcome based on how prevalent or familiar that outcome appears in their lives. People exhibiting this bias perceive easily recalled possibilities as being more likely than those prospects that are harder to imagine or difficult to comprehend.

Optimism bias
Optimism bias can cause investors to believe they are getting market like returns, when in fact they need to be wary of things like inflation, fees, and taxes that eat away at these returns and eliminate the long-term benefits of compounding returns

CONCLUSION
As we learnt about DANIEL KAHNEMANN is a psychologist of economics and also he is known for father of psychology.

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