Our Science


Prospect Theory

Along with the development of prospect theory and its derivatives such as composite prospect theory has come a deeper understanding of the neuroscience behind decision making under risk.

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From the moment we are born we are pre-programmed to react in certain ways to certain things. These pre-programmed responses helped to keep us alive and our genes in the gene pool.

An important thing to remember is that for the vast majority of our history human beings were not completely rational thinking entities. In fact we still aren't.

We were driven by instinct and emotion which actually worked pretty well.

Fight or Flight

A perfect example is the fight or flight response mechanism. Being confronted by a sabre tooth tiger initiated a flight response, those who hung around instead rapidly disappeared from the human breeding stock.

The same in our interaction with human beings. In the first 100 milliseconds of seeing someone we have assessed, pretty accurately, whether they are friend or foe, follower or leader.

Assessing someone by voice alone takes a little longer, about half a second for the same traits of trustworthiness and dominance.

These are completely automated responses that you can do nothing to stop happening and are remarkably resilient once made.

For most of mankind's history these auto responses were good enough, conscious thought and decision making happened but at a low level.

For example a monkey using a stick to get termites out a hole in the termites nest might decide to stop doing it when the supply of tasty termites begins to decline.

The location of the nest then may usefully remain in the ape's brain for future reference.

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