
For decades, social scientists had used a mythical figure to describe how humans make decisions: homo economicus. He was logical and conscientious. To make a decision, he would evaluate all the options open to him, then choose the most rational course of action.

Amos Tversky and Daniel Kahneman's 1974 paper 'Judgement Under Uncertainty: Heuristics and Biases' is a landmark in the history of psychology. Though a mere seven pages long, it has helped reshape the study of human rationality, and had a particular impact on economics - where...