Its been almost 50 years since the genesis of prospect theory from Psychologists Daniel Kahneman and Amos Tversky. This changed our understanding of decision-making, by challenging the idea of humans as rational economic agents. Kahneman won a Nobel prize in economics for this work. Earlier this year Kahneman passed away, and it left me contemplating how his legacy would continue in our ever more digitising sphere. As we navigate an era where information flows freely through phones and the internet, does all this information help us make better decisions, or does it just amplify our biases.

Prospect Theory is grounded in two key principles: loss aversion and reference points. The theory argues that people feel the pain of losses more acutely than the pleasure of equivalent gains. Moreover, decisions aren’t made in isolation—they depend on how outcomes are framed relative to a reference point, often the status quo (Kahneman & Tversky, 1979).

Imagine you are the leader of a country swarmed by a deadly contagious outbreak. It is currently contained in a small town of 600 inhabitants, and you are posed two scenarios.

Scenario 1:

• A sure option to save 200 lives
• A risky option with a 1/3 chance of saving 600 lives, and a 2/3 chance of saving no one

Scenario 2:

• A sure option where 400 people die
• A risky option with a 1/3 chance that no one dies and a 2/3 chance that 600 people die

The scenario illustrated above is the Asian Disease where individuals are Participants were asked to choose between two scenarios to deal with a deadly outbreak. (Kahneman & Tversky, 1981).  

Despite the identical expected outcomes (200 lives saved and 400 lives lost), participants showed a clear preference for the sure option in Scenario 1 and a greater willingness to take the risk in Scenario 2. After doing the mental math of the probabilities in the risky choices,  the objective values are identical (1/3*600= 200 & 2/3*600=400). This illustrates the influence of framing effects and how the way a decision is presented can significantly alter choices. These findings were ground-breaking, suggesting that human behaviour often deviates from rational utility maximization.

Fast forward to today, and we find ourselves living in a world of abundant information. With the rise of smartphones, social media, and constant news feeds, we’re bombarded with data on nearly every topic imaginable. In this information saturated environment, the challenge is not just seeking information but avoiding the wrong information. As we saw in the Asian Disease Problem, more information doesn’t necessarily lead to better decisions. In fact, the abundance of data can often lead to information overload, where the sheer volume of available options paralyzes decision-making (Hong & Kim., 2020)

It’s not just the quantity, but also the quality of information that shapes our choices. The digital age has democratized the sharing of insights, but who qualifies someone to provide authoritative information on a given topic? Poor-quality information, whether it’s fake news, cherry-picking data, or misleading narratives pollutes our judgment. This concept resonates what chess grandmaster Garry Kasparov discusses in his book How Life Imitates Chess. Kasparov argues that success is not simply about having more options. Instead, it’s about the ability to simplify complexity and focus on the most relevant moves. Similarly, in today’s information age, the overwhelming quantity of data can paralyze us unless we know how to filter out the noise and focus on what truly matters. In both chess and decision-making, it’s not about more information, it’s about better, quality information, and how we strategically simplify and act on it.

Implications for today and tomorrow.

The abundance of health information online has made patients more informed than ever. Harking to the now distant days of the covid-19 pandemic, we all have a vague memory of a relative suddenly becoming an expert in the matter- despite no background in the matter. Framing remains a powerful force, as we found before in the Asian disease problem. For example, when a treatment is framed as a 70% success rate, patients are more likely to opt for it than if it’s framed as a 30% failure rate—despite the outcomes being identical (Schneider, 2008). Loss aversion also influences health decisions, patients are more motivated to avoid the loss of health than to pursue potential health gains. But we are not making a life and death decisions everyday, small decisions are subject to constant information exposure. You may be the proud owner and user of a Fitbit, or someone you know is, which is a smart watch that tracks your health vitals throughout the day. To name a few more, the Oral-B app which connects to the toothbrush to provide data on how well your brushing your teeth and the computerised sleep tracking bed cover by eight sleep. Most significant of them all, the meta smart glasses providing constant access to your phone hands free. Always be aware of a new notification.

Political campaigns have capitalized on the power of framing, emphasizing potential losses to galvanize support. For instance, warnings of economic collapse or job losses often resonate more with voters than promises of future prosperity (Levin, Schneider, & Gaeth, 2002). Look back to the recent US election, and the respective messages candidates were advocating for. Voters are also prone to status quo bias, preferring stability even when evidence suggests change could be beneficial (Samuelson & Zeckhauser, 1988). Information from social media. Even news agencies spread captivating headlines on social media platforms. We are so prone to seek the next piece of content, we make a quick judgment of what is presented to us, incorporate it and carry on. The issue arises when this tends to be headlines which don’t shy from using emotionally activating language. This forms opinions faster and sways our judgment which can amplify the reach of potentially misleading or biased information. This amplification can create echo chambers, reinforcing existing beliefs and biases among audiences. (Ghanem et al., 2018). It’s easier to continue with this brief capsule of information and pursue other things than it is to go to the source of the article and intake the whole information.

As we navigate our ever more digitised lives, constant exposure to information distorts how we view the world and make decisions. In politics, social media feeds, and even our personal lives, we are inundated with headlines that evoke immediate emotional responses. These quick, often emotionally charged bites of information shape our thinking more than we may realize, as they latch onto our primal instincts—fear of loss, desire for certainty, and the need for stability. This is particularly true in times of political unrest or economic uncertainty, when the framing of an issue can turn a complex topic into a binary choice: safety or risk, security or collapse. Such framing doesn’t require us to engage deeply; it provides us with simple narratives that fit neatly into our existing worldviews, which can bypass deeper thought.

With constant access to personalized data through health trackers or our social media it catalyses our decisions taking, often leading to worse choices. The greater our exposure, the more we risk reinforcing our own biases, drawn in by headlines that spark immediate reactions rather than thoughtful reflection. In this context, it’s no surprise that many are reluctant to embrace change, even when it offers potential improvement, preferring the familiarity of the present over the uncertainty of the future.