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>> 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 e-mindset
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... I think that's pretty much all
I have to say. If you want to check out this Prospect Theory eMindset, you can go to links.engeljournal.com/prospect
That will take you here.