When a car professional talks to you about cars, he may think that words such as ABS (anti-lock braking system) and ASR (drive anti-skid system) are understood by everyone, let alone “turbocharged” and “maximum torque.” “Again. A person engaged in economic research is likely to talk endlessly, such as “onshore renminbi”, “offshore renminbi” and “PMI (Purchasing Manager Index)”, but he did not expect the audience to understand what he was talking about.

This phenomenon is called “the curse of knowledge”.

Elizabeth Newton of Stanford University conducted an experiment in which she divided participants into two roles: “beater” and “audience.” The percussionist got a list of 25 famous songs, such as “Happy Birthday to You”. Each percussionist picks one of them and knocks the rhythm to the audience by knocking on the table. The audience’s task is to guess the name of the song based on the beat rhythm.

During Elizabeth’s experiment, the percussor repeated the song 120 times, and the audience only guessed 3 of the 120 percussions, which is 2.5% of the total.

The interesting part of this experiment is that before the audience guesses the song name, Elizabeth asks the percussionist to predict the probability of the audience guessing the song. They think that 50% of the audience should be able to guess the song. In fact, only one of the 40 tunes can be guessed when the percussionist knocks out. However, the percussionist himself believes that one out of every two tunes can be guessed. What is the reason for the huge gap? What?

When a percussionist beats the rhythm, his brain is full of the rhythm of the song, but what the audience hears is not the case at all. All they could hear was a string of separation and weird knocks, like Morse code.

However, for the listener to put in a lot of effort to distinguish the music, the percussor was shocked: isn’t it easy to hear it? When a listener can’t hear “Happy Birthday to You”, the percussor’s thoughts may be-how can they be so stupid?

Similarly, when a person possesses certain knowledge, it is difficult to imagine what it would be like without this knowledge. Just like when I hit a piece of music, I take it for granted what music is in the ears of the audience. This illusion is “the curse of knowledge.” Once we know something, it is often difficult to imagine that others will not know what it looks like.

The “Curse of Knowledge” is like a Tower of Babel, so that no one in different industries understands anyone. For example, if you are chatting with a professional in the IT industry, he may be full of terminology to make you confused, and he thinks these are just basic concepts that everyone understands.

Therefore, to break the curse of knowledge, you must use a language that everyone can understand, especially professionals. It is best to use popular methods to explain the problem to the public. For example, for some esoteric economics knowledge, economists use language such as “there is no free lunch”, “don’t kill the duck that lays the golden egg”, and “two birds in the forest are not as good as a bird in your hand”. It is easy to understand.

In 1980, Ronald Reagan was in the presidential campaign with Jimmy Carter. When talking about economic issues, he could have used economic terms, such as high inflation rate, unemployment rate, and increasing tax rate to explain the economic performance. Decline, but he left the problem to the audience. He asked: “Are you richer now than you were 4 years ago?”

The movie “Big Short” tells the story of how several Wall Street traders made money by shorting subprime mortgage products under the background of the property market bubble.

The concept of financial derivatives involved in the subprime mortgage crisis is very complicated. For example, the most popular investment in the United States at the time was a mortgage debt (MBS). Wall Street financiers bundled products with poor credit into housing mortgage-backed bonds (RMBS). Financiers continue to securitize RMBS, turning the lowest-rated bonds into guaranteed debt certificates (CDOs)… If the movie wants to make this clear, it may not be enough for an hour, and the audience will have already slipped away. In the movie, the actor Ryan Gosling used building blocks to build a tower. This building block tower represents the illusion of the current economic prosperity. Then Ryan suddenly removed the building blocks from the bottom layer, which caused the entire building block tower to collapse.

Ryan uses this tower to illustrate the subprime mortgage crisis: once the bottom layer (that is, the most trash) loan defaults, the building blocks above will also collapse, and the building blocks on the top layer will fall more badly. This simple building block tower allows the audience to roughly understand the subprime mortgage crisis and its consequences within a minute.

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