Tversky developed together with Daniel Kahneman on the Prospect Theory to model human judgment in business decisions more realistic than the traditional cost -benefit model. In 1965 he received his doctorate at the University of Michigan and then taught at the Hebrew University of Jerusalem, before he moved to Stanford University. He was instrumental in the psychological study of heuristics, the discovery of systematic human error (cognitive distortion) and the study of decisions under risk. In 1984 he received the MacArthur Fellowship.
Daniel Kahneman and Vernon L. Smith, with whom he had worked for many years, received the 2002 Nobel Prize in Economics.
- Prospect Theory: An Analysis of Decision under Risk with Kahneman in Econometrica, Vol 47, No. 2 ( Mar., 1979), pp. 263-291.
- Assessing Uncertainty in the Journal of the Royal Statistical Society. Series B ( Methodological ), Vol 36, No. 2 (1974 ), pp. 148-159.