MODULE 02 — HOW AI THINKS · 10 AI Concepts

Fine-tuning vs. RAG vs. prompting

Three answers to one wish — “make it better at my task”. They are not competitors, and the expensive one is almost never the one you needed.

“make it better at my task” one wish, three routes change the prompt free · instant change what is on the desk cheap · seconds change the model’s numbers costly · weeks
Only the third door alters the model itself. The first two leave it exactly as it was and change what it is handed.
DOOR 1

Prompting

Changes
the words you send
Cost
nothing
New info live
instantly
Good at
tone, length, format, one-off tasks
Can’t do
supply facts it was never given
DOOR 2

Retrieval (RAG)

Changes
what gets pasted in before your question
Cost
low, ongoing
New info live
as soon as the document is indexed
Good at
your facts, your files, anything that changes
Can’t do
change how it writes, or fix a bad retrieval
DOOR 3

Fine-tuning

Changes
the model’s own numbers — its “weights,” the parameters from page 3
Cost
high, and again for every update
New info live
weeks — a whole training run
Good at
a consistent style or format, at scale
Can’t do
reliably store facts you need to be correct

Pick what you actually need

The expensive mistake

Fine-tuning does not teach facts

“Returns: 14 days, store credit” one fact, two routes DOOR 3 — INTO THE WEIGHTS dissolved across billions of numbers nothing to point at · weeks to correct “Returns are accepted within 30 days.” handbook-flavoured, and wrong DOOR 2 — ONTO THE DESK 14 days · store credit · §4.2 sits there as readable text swap the file · fixed in seconds “Within 14 days, as store credit (§4.2).” quoted, and checkable

Trained on your handbook, it gets fluent at sounding like your handbook — including confident sentences about policies you never had. Facts that must be right belong on the desk.

Start at door 1 because it is free, and move to door 2 the moment the answer depends on something the model cannot know. Door 3 is for when both already work and you need that behaviour thousands of times a day.

So what

Ask which thing is wrong: the instructions, the information, or the manner. Each has its own door, and only one of them is expensive.

MODULE RECAP

Before you move on

Click an idea below, then click the card it matches.

Now you know why it needs telling, why it can be wrong, and the three honest ways to fix that — asking, showing, or retraining.

Continue to Module 3 →