Theoretical Comparison Of The Decision Theories Of J. M. Keynes, Kahneman-Tversky, And Einhorn-Hogarth

It is demonstrated that J. M. Keynes in 1921 provided a complete decision rule that handles both the cases of nonlinear probability preferences and ambiguity or uncertainty. The 1979 Kahneman-Tversky approach deals only with risk (nonlinear probability preferences) and does not specify a decision rule. The 1985�1986 Einhorn-Hogarth anchoring and adjustment rule deals only with ambiguity or uncertainty and not risk. Only Keynes' rule does both.