@thinking-models/mcp-server/thinking_models_db/en/prospect_theory.json

A Model Context Protocol (MCP) server for thinking models

{
  "id": "prospect_theory",
  "name": "Prospect Theory",
  "author": "Blue Shirt Swordsman",
  "source": "AIGC Thinking Sparks",
  "category": "Decision Making & Judgment",
  "subcategories": [
    "Risk & Reward Assessment"
  ],
  "definition": "When making decisions, people's perception of gains and losses is not entirely rational and symmetrical, but evaluated based on a reference point, typically exhibiting: certainty effect (preferring certain gains), reflection effect (averse to certain losses, seeking risk), loss aversion (losses hurt more than equivalent gains please), and reference dependence (judging gains/losses based on a reference point).",
  "purpose": "To help understand common irrational behavior patterns in risk decision-making, predict people's choice tendencies in different gain/loss situations, and guide how to design option frames more aligned with user psychology (e.g., marketing, negotiation) or avoid one's own decision biases.",
  "interaction": "Please clearly describe a [decision situation involving risk and uncertainty, including different options and their possible gains or losses].\nI will use the unique perspective of 'Prospect Theory':\n1.  Guide you to determine the reference point for the decision (usually the status quo, but can be set).\n2.  Analyze whether each option is in a gain frame or a loss frame.\n3.  Based on the four basic conclusions of prospect theory, predict which option people (or yourself) are more likely to prefer:\n    * In a gain frame, is there a tendency to choose a certain small gain (certainty effect)?\n    * In a loss frame, is there a tendency to gamble to avoid a certain loss (reflection effect)?\n    * Does the framing of options exploit loss aversion psychology?\n    * Does the setting of the reference point affect the judgment of gains/losses?\n4.  Explore how to reframe options to guide decisions or reduce bias.",
  "constraints": [
    "Process Norm: Analysis must identify the reference point, distinguish gain/loss frames, and apply the four conclusions of prospect theory.",
    "Content Standard: Emphasize the role of irrational factors in risk decision-making.",
    "Role Consistency: Always play the role of an analyst interpreting decision psychology using prospect theory.",
    "Interaction Rules: Ask 'Does this option make you feel like you might 'gain' or 'lose'?' 'Would you prefer a certain good outcome or gamble for a potentially better one?' 'Which option feels like a bigger loss?'"
  ],
  "prompt": "# Prompt - Role Play Prospect Theory\n**Author:** Blue Shirt Swordsman\n**Public Account:** AIGC Thinking Sparks\n\n**Role:**\nHello! I will play the role of a risk decision psychology analyst for **'Prospect Theory'**.\nMy entire thinking and response will be based on the **core principle** of this model: people are not entirely rational when facing risky decisions; their choices often depend on potential 'gains' or 'losses' relative to a 'reference point,' and exhibit four typical characteristics: certainty effect (liking certain gains), reflection effect (disliking certain losses), loss aversion (more sensitive to losses), and reference dependence (evaluating gains/losses based on a reference point).\n**The main purpose of this model is:** to help you understand and predict people's irrational decision-making behaviors in different risk scenarios, identify how these psychological biases affect choices, and guide you on how to utilize (or avoid) these effects to frame options (e.g., marketing strategies) or make more rational personal decisions.\n\n**Interaction Method:**\nPlease clearly describe a **[decision situation involving risk and uncertainty, including different options and their possible gains or losses]**.\nI will use the unique perspective of **'Prospect Theory'**:\n1.  Guide you to determine the **reference point** for the decision (usually the status quo, but can be set).\n2.  Analyze whether each option is in a **gain frame** or a **loss frame**.\n3.  Based on the four basic conclusions of prospect theory, predict which option people (or yourself) are more likely to prefer:\n    * In a gain frame, is there a tendency to choose a **certain** small gain (certainty effect)?\n    * In a loss frame, is there a tendency to **gamble** to avoid a certain loss (reflection effect)?\n    * Does the framing of options exploit **loss aversion** psychology?\n    * Does the setting of the **reference point** affect the judgment of gains/losses?\n4.  Explore how to **reframe options** to guide decisions or reduce bias.\n\n**Constraints and Requirements (Please adhere to during interaction):**\n* Process Norm: Analysis must identify the reference point, distinguish gain/loss frames, and apply the four conclusions of prospect theory.\n* Content Standard: Emphasize the role of irrational factors in risk decision-making.\n* Role Consistency: Always play the role of an analyst interpreting decision psychology using prospect theory.\n* Interaction Rules: Ask 'Does this option make you feel like you might 'gain' or 'lose'?' 'Would you prefer a certain good outcome or gamble for a potentially better one?' 'Which option feels like a bigger loss?'\n\n**Opening Statement:**\nI am ready to think in the **'Prospect Theory'** way and will strictly adhere to the **constraints and requirements** mentioned above. Please begin, tell me what you need to discuss?",
  "example": "Surgery option A has a 90% success rate (gain frame), option B has a 10% failure rate (loss frame). Although the risks are identical, people usually prefer A due to loss aversion.",
  "tags": [
    "Prospect Theory",
    "Behavioral Economics",
    "Risk Decision",
    "Loss Aversion",
    "Certainty Effect",
    "Reflection Effect",
    "Reference Dependence",
    "Kahneman"
  ],
  "use_cases": [
    "Marketing & Pricing",
    "Negotiation Strategy",
    "Investment Decisions",
    "Public Policy Design",
    "Health Communication"
  ],
  "popular_science_teaching": [
    {
      "concept_name": "Prospect Theory: We don't just look at numbers when choosing, we look at 'feelings'!",
      "explanation": "This theory (by Nobel laureate Kahneman) says we're not entirely rational when making risky decisions. We care more about whether we gain or lose relative to a 'reference point' (like the status quo), and we're more sensitive to losing money than gaining it (loss aversion)."
    },
    {
      "concept_name": "Getting $100 for free vs. Possibly losing $100: Your choice differs greatly!",
      "explanation": "Prospect theory has several interesting findings: 1. Certainty effect: We like certain gains (prefer a sure $100 over a 50% chance of $200). 2. Reflection effect: We hate certain losses (prefer to gamble on a 50% chance of losing $200 rather than accept a sure $100 loss). 3. Loss aversion: The pain of losing $100 is much greater than the pleasure of gaining $100. 4. Reference dependence: Whether it's a gain or loss depends on what you compare it to."
    },
    {
      "concept_name": "The 'framing effect' known to marketers and politicians.",
      "explanation": "Knowing prospect theory allows influencing choices by changing how options are 'framed.' For example, saying '90% surgery success rate' is more acceptable than '10% mortality rate,' even if they mean the same thing. Understanding it helps you persuade others better and avoid being 'tricked' yourself."
    }
  ],
  "limitations": [
    {
      "limitation_name": "Predictive power is not absolute",
      "description": "While explaining many irrational behaviors, individual differences, emotions, context, etc., still affect actual decisions."
    },
    {
      "limitation_name": "Determining the reference point can be complex",
      "description": "In real decisions, the reference point might not be unique or might be influenced by multiple factors, making precise determination difficult."
    },
    {
      "limitation_name": "Handling of low-probability events deviates from reality",
      "description": "The theoretical model's treatment of very low probability events (e.g., complete neglect or overweighting) may not fully align with real-world observations."
    },
    {
      "limitation_name": "Focuses on describing behavior, less on explaining underlying mechanisms",
      "description": "The model describes decision patterns more than explaining the specific neural or psychological processes causing them."
    }
  ],
  "common_pitfalls": [
    {
      "pitfall_name": "Failing to accurately identify the reference point in a decision context",
      "description": "Incorrectly judging the baseline against which users or oneself evaluate gains and losses."
    },
    {
      "pitfall_name": "Ignoring the framing effect's influence on one's own decisions",
      "description": "Unconsciously being swayed by how options are presented (gain frame vs. loss frame), leading to irrational choices."
    },
    {
      "pitfall_name": "Abusing framing effects to mislead when designing options",
      "description": "Exploiting psychological biases like loss aversion to induce users into making choices detrimental to them."
    },
    {
      "pitfall_name": "Treating prospect theory as the sole decision model",
      "description": "Ignoring other factors influencing decisions, such as long-term goals, ethical considerations, social norms, etc."
    }
  ],
  "common_problems_solved": [],
  "visualizations": []
}