The Prospect Theory eMindset is a one page summary of Prospect Theory–chunked into simple facts, questions, and visualizations.
Information is presented in parallel. Readers can jump around in whatever way “fits” their brain best. Many discover this is a faster way to learn than reading sentence by sentence.
Below is a transcript of the video:
>> ENGEL: The Prospect Theory eMindset separates Prospect Theory into three specific types of information. We’ve got our statements or actions to take over here. These are known facts on the left-hand side.
We have our questions to ask ourselves to check in with the theory, also frequently-asked questions or answered questions are found here under the completed section. We’ve got visualizations over here to help us see what the concept is. And all this is delivered in parallel.
Now, the reason why this is significant, especially for theories like Prospect Theory, presenting it in this way, is that theories are… and academic information is highly textual and difficult to understand.
When reading an an academic journal or something maybe like a textbook we find information–all these types of information are lumped together. We may find sentences explaining people’s risk preferences for high-probability chances combining these two facts in one. And then they also give an example, like in right-next sentence.
Then, they talk about a theory that Prospect Theory disagrees with–all in the same sentence. By separating it in this way, what we are able to do is we’re able to give the brain one thing to look at a time. And we are able to help the brain manufacture specific examples, which I will get into that a little bit in just a few moments. I want to first delve into what we’re seeing right here for both the actions or statements and questions.
We’re seeing short sentences. This is…umm… Certainty is best. This is one of the categories that people… people in Prospect Theory assumes that people value certainty a lot.
So, people would prefer certainty even if the reward is smaller. Here is an example of that. Here’s a $1,000 reward with a 100% chance versus a $3,000 reward with a 50% chance. You can see that the $1,000 reward with the 100% chance is heavier. It’s weighted more.
So, look at how simple the sentence is: People tend to prefer certainty even if reward is smaller. This is not necessarily a beautifully-written sentence. This is not Pulitzer prize-winning material, but it’s small enough to go directly into the brain and tell the person exactly what you are talking about. And even over here… The history of Prospect Theory, we have the founders and when they started the work, the original name, and see how it is broken up? Those three points might have all been in one sentence but since we broke it up we allowed the brain more space to understand exactly what…umm… what each concept being presented was instead of having to parse it out of a sentence. That’s a lot easier to get.
I want to look at these questions. These questions are, if you can imagine the back of a textbook, you know how there’s questions about what was– you know– at the end of the chapter of a textbook, there may be five to ten questions about the chapter to help the reader go back into the chapter to find the answer so that they learn. Well, instead of sticking it after 20 pages of a long textbook, why don’t you stick it in parallel to the information so people can get it all at the same time?
That’s what we’re doing here. In the case of Prospect Theory, this is a highly interactive kind of theory because it’s about how people feel and peoples’ intuition and instincts. So, our questions in this case are actually just checking in with the reader about how they feel. Which feels more comfortable: win a $1,000 with 100% chance versus win $3,000 with 50% chance? So, not only are we telling them that people prefer certainty even if the reward is smaller, we are giving them the opportunity to check in. Is that true with you? And most people willl say yes.
Finally, I want to talk about the examples and giving people an example, especially to understand a theory. There are some people out there that are really talented with concepts. You can give them a theory and they get it. There are some people out there that (the majority of people) need an example or else they don’t understand. And I want to throw this out there that both people need an example or else they won’t understand.
The difference between the person who is really good at understanding concepts and theories and the person that needs you to give them an example all the time, is that the person who is good at understanding these theories is manufacturing examples in their own mind until they find one that makes sense.
What we’re doing here in this eMindset is we are giving everyone a chance to see an example, and we’re doing it in parallel to the actual text. So, they don’t have to read a bunch of frustrating text, not get it, then read another line of text which is an example. They are getting it at the same time.
It’s like 3-dimensional thinking instead of 2-dimensional thinking. 2-dimensional thinking might be like driving a car. You have, at best on a freeway, most freeways have five… four to five lanes, and you can’t go into the sixth lane and you can’t float your car and hover above the traffic. If the other people in the other lanes want to go slow you have to go slow; you have to go here to get there.
But if we were in an airplane or if we were in an underwater submarine we could go up, or we could go down, we could go side to side. There’s all three dimensions that are available to our awareness. With the eMindset we are unlocking three dimensions. The known facts. Questions. And the visualizations all at the same time. There is no particular order to read this in; it’s jump around.One last thing. Colors can also be used to show correlations between objects. So, “faced with gain, prefer less risk,” here is the example question. It’s in blue. Here’s a statement in green. Here is the example question. We can use these colors. This is the same pattern down here as well. We can use colors to show correlation between objects.