Kahneman has integrated insights from psychology into economics, "especially concerning human judgment and decision-making under uncertainty," the Royal Swedish Academy of Sciences said in its citation.
A modest individual, Kahneman was quoted that he wants the excitement over the Nobel recognition to pass quickly, so that he can get back quietly to his work.
Kahneman received his Nobel Prize in recognition for work that he did many years ago with a colleague, Amos Tversky, who died in 1996. "The thought of his missing this day saddens me," Kahneman said.
Kahneman still defines himself as "Israeli and American" in his publications.
The Royal Swedish Academy of Sciences noted Kahneman's contributions of psychological insight to the field of economics. In particular, he showed that human decision making in times of uncertainty often departs from what is expected under standard economic theory.
An example of the Kahneman, psychological observation in economic settings is a conclusion that even if a consumer prefers three pears to two apples, he may choose one apple to three pears.
Kahneman, who has been at Princeton since 1993, says he has a strong connection to Israel. His children and grandchildren live in Israel, and he frequently visits and lectures in the country. Kahneman's wife, Anne Treisman, also lectures at Princeton.
Kahneman was born in Tel Aviv in 1934. He served as an officer in the Givati Brigade. He received his bachelor's degree in psychology and mathematics from the Hebrew University of Jerusalem and his Ph.D. from the University of California at Berkeley in 1961. He taught at Hebrew University from 1961 to 1978 and at the University of British Columbia from 1978 to 1986. From 1986 to 1994 he was a professor at Berkeley.
Kahneman is the fifth Israeli to win a Nobel Prize.
Professor Daniel Kahneman, a dual American-Israeli citizen based at Princeton University in New Jersey, won the 2002 Nobel Prize for Economic Sciences for pioneering the use of psychological and experimental economics in decision-making to make markets safer. Kahneman shares the $1.1 million award with Vernon L. Smith of George Mason University.