Lots of making prep seem bad around here, and I think that is a bit odd. Something to note when we are discussing the use of prep. A growing body of research shows that working memory, the memory used in improvisation, has limits. This is often referred to "working memory capacity" or WMC. This was given as the "magical number seven" in the 1950s.
There is the old myth that phone numbers are seven digits long, in the US, because of this limit. That isn't true, but most research puts this limit around seven numbers for an average person's working memory capacity. Onaverage a person can repeat back roughly 7 numbers they were given moments prior in an experiement. After that you see errors, with increasing frequency. With extensive training, you can short cut this, but there is always a limit.
So why does this matter? Well it means that there is a limit to your improv skill. Reseach shows us that as you approach this limit, under high cognitive load, your creativity declines. This is because the additional mental effort required for a task can overwhelm working memory, making it harder to generate or process novel ideas. Often, for us DMs, this is when a chest has nothing of note in it, or when we resort to a cliche or other predictable outcome. You might also forget names, voices, or other details. Watching for these in a DM can be amusing.
It might be better to engage in some prep instead of forgoing it completely out of fear of a negative outcome. Because by relying on only working memory through improv, you are essentially bottlenecking your creativity from the start. Not engaging in prep is simply a handicap. It would be better to prep in a way that avoids any agency issues, so as to still reap the benefits of using more of your brain.
Sources:
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Working memory benefits creative insight, musical improvisation, and original ideation through maintained task-focused attention - PubMed
Anecdotes from creative eminences suggest that executive control plays an important role in creativity, but scientific evidence is sparse. Invoking the Dual Pathway to Creativity Model, the authors hypothesize that working memory capacity (WMC) relates to creative performance because it enables...pubmed.ncbi.nlm.nih.gov
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Working memory capacity predicts conflict-task performance - PubMed
The relationship between the ability to maintain task goals and working memory capacity (WMC) is firmly established, but evidence for WMC-related differences in conflict processing is mixed. We investigated whether WMC (measured using two complex-span tasks) mediates differences in adjustments...pubmed.ncbi.nlm.nih.gov
I agree, and will add that prep can be a great help in my ad-hoc improvisation. If I know certain things about a section of town, it is far easier to add to it than to make it all up on the fly. Is this section of town the slums or an older neighborhood that has fallen into disrepair? It gives me a solid foundation to build on rather than having to build everything from the ground up.
I can also take some NPCs that I thought of and rethink them. Maybe I had Jasper the old guy who lives in the slums but I never introduced him. Now I can use parts of Jasper like his mannerisms, general look (finding a look and "voice" for an NPC is important to me) to build a different NPC with completely different personality. So now I still have that NPC loosely based on Danny Devito but instead of a good hearted soul who's just fallen on hard times they're secretly pretending to be old gentry that just wants the neighborhood to return to it's glory days but are really an evil warlock kidnapping people to sacrifice them. I still use some aspects of the NPC as a starting point, but they are completely different people.