Kahneman's published empirical findings challenge the assumption of human rationality prevailing in modern economic theory.

"[2][3][4] With Amos Tversky and others, Kahneman established a cognitive basis for common human errors that arise from heuristics and biases, and developed prospect theory.

His father, Efrayim, was picked up in the first major round-up of French Jews, but he was released after six weeks due to the intervention of his employer, La Cagoule backer Eugène Schueller.

[7] Kahneman wrote of his experience in Nazi-occupied France, explaining in part why he entered the field of psychology: It must have been late 1941 or early 1942.

I went home more certain than ever that my mother was right: people were endlessly complicated and interesting.In 1954, Kahneman received his Bachelor of Science degree, with a major in psychology and a minor in mathematics, from the Hebrew University of Jerusalem.

His 1961 dissertation, advised by Susan Ervin, examined relations between adjectives in the semantic differential and allowed him to "engage in two of [his] favorite pursuits: the analysis of complex correlational structures and FORTRAN programming".

Kahneman and Tversky spent an entire year at an office in the Van Leer Institute in Jerusalem, writing this paper.

Its success was due to its synthesis of ideas and results discussed at the time about economic behavior under risk in a simple model, whose predictions were systematically supported by psychological experiments.

The pair also teamed with Paul Slovic to edit a compilation entitled "Judgment Under Uncertainty: Heuristics and Biases" (1982) that was a summary of their work and of other recent advances that had influenced their thinking.

[7] In 2021, Kahneman co-authored a book with Olivier Sibony and Cass Sunstein, titled Noise: A Flaw in Human Judgment.

[20] The Harvard psychologist and author Steven Pinker said of Kahneman that: "His central message could not be more important, namely, that human reason left to its own devices is apt to engage in a number of fallacies and systematic errors, so if we want to make better decisions in our personal lives and as a society, we ought to be aware of these biases and seek workarounds.

"[21] Kahneman and Tversky both spent the academic year 1977 to 1978 at Stanford University, Kahneman as a fellow at the school's Center for Advanced Study in the Behavioral Sciences interdisciplinary research lab and Tversky with a visiting appointment at the university's psychology department.

[22] Richard Thaler was a visiting professor at the Stanford branch of the National Bureau of Economic Research during that same year.

[7] Richard Thaler obtained a grant from the Russell Sage Foundation to spend the academic year 1984 to 1985 with Kahneman at the University of British Columbia.

[25][26] A few papers on decision making appeared after that hiatus, notably cumulative prospect theory, and an explanation of risk-taking by unrealistic "bold forecasts", but the focus of Kahneman's research from that time was the study of subjective experience.

It states that a person's overall impression of past events is determined, for the most part, not by the total pleasure and suffering it contained, but by how it felt at its peak and at its end.

[36] For example, the memory of a painful colonoscopy is improved if the examination is extended by three minutes in which the scope is still inside but not moved anymore, resulting in a moderately uncomfortable sensation.

This connection led Kahneman, together with Ed Diener and Norbert Schwarz to organize a workshop, which yielded a book that covered a range of topics in hedonic psychology, which they defined as "the study of what makes experiences and life pleasant or unpleasant.

Around 2000, he assembled a team consisting of Alan Krueger, David Schkade, Norbert Schwarz and Arthur Stone.

Measures of affect are routinely included in well-being questionnaires, but the idea that experienced happiness is the better concept did not hold.

Kahneman defined happiness in terms of "what I experience here and now",[43] but says that in reality humans pursue life satisfaction,[44] which "is connected to a large degree to social yardsticks—achieving goals, meeting expectations".

[45][46][47] With David Schkade, Kahneman developed the notion of the focusing illusion to explain in part the mistakes people make when estimating the effects of different scenarios on their future happiness (also known as affective forecasting, which has been studied extensively by Daniel Gilbert).

In that paper, students in the Midwest and in California reported similar levels of life satisfaction, but the Midwesterners thought their Californian peers would be happier.

The only distinguishing information the Midwestern students had when making these judgments was the fact that their hypothetical peers lived in California.

[10] After leaving Israel in 1978 and accepting positions at different universities, the intensity and exclusivity of their earlier period of joint collaboration was reduced.

[65] Former colleague and Princeton faculty member, Eldar Shafir said that Kahneman "was a giant in the field" and that "many areas in the social sciences simply have not been the same since he arrived on the scene.

"[68] Kahneman and Tversky were “the founders of our field”, said Ulrike Malmendier, a behavioral economist and member of the German official council of economic experts.