Toward a Positive Theory of Consumer Choice
Thaler, Richard
Journal of Economic Behavior & Organization 1, no. 1 (1980): 39-60
https://doi.org/10.1016/0167-2681(80)90051-7
“How does the normative theory hold up in more complicated situations Consider the famous birthday problem in statistics: if 25 people are in a room what is the probability that at least one pair will share a birthday? This problem is famous because everyone guesses wrong when he first hears it. Furthermore, the errors are systematic — nearly everyone guesses too low (The correct answer is greater than 0.5.) For most people the problem is a form of mental illusion. Research on judgment and decision making under uncertainty, especially by Daniel Kahneman and Amos Tversky (1974, 1979), has shown that such mental illusions should be considered the rule rather than the exception.”
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