Morningstar Magazine - August/September 2018 - 56

Investors

Cutting Through the Noise
Daniel Kahneman on applying behavioral
psychology to financial advice.

Undiscovered Manager
62

Aligning Interests

66

Value and Income
Sector Snapshot: Utilities

MORNINGSTAR CONVERSATION

Sarah Newcomb

Sector Rap
69

	

	
70

User	Profile

Feeding a Need to Help

The 30th annual Morningstar Investment
Conference in June was a fitting platform for
a conversation with Daniel Kahneman, one
of the founding fathers of behavioral economics
and a recipient of the Nobel Memorial Prize
in Economic Sciences in 2002. In partnership with

Amos Tversky1 and others, Kahneman's
research on judgment and decision-making
established that heuristics and biases
can lead to errors-a refutation of the perfectly
rational investor. In "Prospect Theory: An
Analysis of Decision Under Risk,"2 Kahneman
and Tversky provided more realistic models
of economic behavior and gave us the vocabulary
of frames and anchors common in behavioral
finance today.

1 Michael Lewis detailed their relationship and research in The Undoing Project: A Friendship That Changed Our Minds. 2016.
New York: W.W. Norton & Co.
2 Kahneman, D. & Tversky A. 1979. "Prospect Theory: An Analysis of Decision Under Risk." Econometrica, Vol. 47, No. 2,
pp. 263-292.

Daniel Kahneman and Sarah Newcomb on
the main stage at the 2018 Morningstar Investment
Conference in Chicago.

56

Morningstar August/September 2018



Table of Contents for the Digital Edition of Morningstar Magazine - August/September 2018

Contents
Morningstar Magazine - August/September 2018 - Cover1
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Morningstar Magazine - August/September 2018 - 1
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Morningstar Magazine - August/September 2018 - Contents
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