Prospect theory is a particular subset of behavioral economics, both heavily influenced by the collaboration of Daniel Kahneman and Amos Tversky. This 14 year collaboration produced ground breaking work in cognition theory and resulted in a Nobel Prize in Behavioral Economics. Their work has been cited in many fields of academic study, from architecture to artificial intelligence. In 2011, Kahneman published Thinking Fast and Slow, which is a great summary and introduction to their work in this field.
Prospect Theory, at heart, is an investigation as to how humans make the decisions that they do. In this regard it is very closely related to the traditional field of psychology, but where traditional psychology explores the formative process by which individuals develop motivational factors, prospect theory explores the mechanics by which information is observed and processed. Traditional Psychology explores why people respond to information the way that they do; Prospect Theory explores how they perceive information in order to respond. Both are necessary for a complete picture of the mental process.
Prospect Theory has offered several notable revelations about human beings, most notable is that every single person, regardless of socioeconomic status, gender, race, nationality, age, sexuality, I.Q., religion, etc..., everyone makes the same mistakes in the same ways. This is the second great Truth of developmental psychology: people are all the same. As psychologists the world over set themselves on fire, let me qualify that. People are not exact replicas of each other, but are the same in some interesting ways. In light of the first Truth, that everyone is different, this second Truth becomes the foundation for the First Law of Human Dynamics: because people are so very different, anything that is true about each us is a significant fact about the nature of all of us, or Ringdahl's Theory of Reflexive Humanity. As such things go, we can flip it around and see that anything that is true about all of us is a significant fact about the nature of each of us.
That is to say, we have been thinking about how people think and why they behave the way they do for a very long time, but we only recently began writing down predictions and testing them. This is when the rapid development of the field exploded and is another testament to the benefit of the scientific method, when used appropriately. This is what happens when you make a prediction, which you have been carefully cultivating over decades of painstaking research in collaboration with your colleagues, who have become some of your closest and only friends: all of those friends and colleagues spend the rest of their careers trying to prove you wrong. The history of psychological development is littered with dalliances and schisms, and would make for a terrific, if geektacular, soap opera. This theoretical cannibalism has a similar effect to the purification of gold, in that this trial by fire burns away the parts of the theories that don't work. This does not prove the theory. This is a common misconception. Science doesn't really prove anything. Good science disproves things. You could consider science as an ongoing voyage of discovery of all of the ways that we used to be wrong.
Hall, Freud, and Piaget wrote some predictions down and a whole bunch of people tried to prove them wrong, and managed to do so in some areas and failed to do so in others. This is how the subsequent fields of developmental psychology grew, out of trying to explain the things that Freud and Piaget did not explain. A large part of the language of this dialectic was informed by some concepts that Hall, Freud, and Piaget used, namely that children go through a process of becoming adults, early life events influence the trajectory or nature of this process, and that the process appears to go in a progression of steps, which they called stages. As a result, most of the theories proceed in stages, though this is mostly a tool to note particular events in the process in relation to each other chronologically.
Freud was singularly important to the general field of developmental theory, as the first person who really connected early life events to later life habits and dysfunctions. This seems like the kind of thing that can come across as being obvious, now, but that is because all of us got to grow up in a world where Freud had already demonstrated this reality. At the time, this was a revolutionary concept, and the rest of the field spilled out of it.
I have a confession to make. I have never hitched, and I rarely hike. The title is an allusion to a book I love, but also to an idea: the idea that we can have a guide that has the information that we need delivered in a manner we can access. And it reminds me not to take myself too seriously. Now, when I say that we can have a guide, I am not talking precisely about being able to pull up obscure trivia that effectively informs the situation at hand, though that is awesome and how the internet on our phones would work in a perfect world. There is too much information. A guide that is built on making information available isn't that helpful of a guide without an omniscient third party manipulating the plot. I think that we can still have a guide, but one that looks at how we process the reality around us, among us, and within us, and that developmental psychology, informed by biology and understood through cultural lenses, can produce that sort of a guide. I want to talk today about the possibility of an inclusive psychological development model, and I'll explain what exactly I mean by that in a bit. First we are going to talk about talking about things.
Communication is a tricky thing. Later on we are going to talk about some biases and heuristics that combine in some pretty interesting ways, one of which we are going to start with right up front, called the underestimation of inferential impact. Whenever you talk, you have an idea that you are trying to represent with mere words. We like to think that we are flawless concept symbolizers, but we do not usually manage to get the entirety of our idea into our words. We usually manage to get about 40% of our idea into our words, but that is not what the listener always gets out of those words. People manage to receive about 25% of the information given to them, which means that of our original idea, only about 10% gets received. There are a couple of things that we can do to help get that number up, and we are going to try some of them.
One of those techniques is to clarify terms to minimize miscommunication. To that end, before we dig into the model itself, I want to describe the concepts with which we will be working, so we can all be on the same page. Or at least, so you can all see what page I'm on, regardless of whether you want to join me. In the classical linguistic tradition, we want to understand nouns before modifiers, so I'll start with the last concept in the phrase "psychological development model": model. What do I mean when I say I want to talk about a model? Am I building a miniature version of a larger thing? Am I trying on developmental theories and strutting about so you can imagine what you would look like in the latest fashions in world paradigms? I guess in a way I am doing all of those things, but in another, more accurate way I am talking about something different. A model, in the manner that I am going to be using it today, Is a formal structure where ideas collide with observations. In this case most of the ideas are mine about the observations by the western psychological tradition. That being said, I also might talk about small cars and do some strutting, so it's best to stay on your toes.