Known,Unknown,and Unknowable

By Cui Peng

Is the earth round? The answer should be positive in most people’s minds to a certain extent.However,it might not be the case under some circumstances.For instance,once I planned to travel to Yangzhou from Beijing,which is geographically closer than that from Beijing to Nanjing,the best route from Beijing to Yangzhou I found,however,was flying to Nanjing first,and then taking the north-bound train to Yangzhou.

So it seems there’s a different route map in the real world where it takes you less time to get to a farther place and longer time to get to a closer one.Let’s take another example,say you feel ill and go to a hospital.Apart from finding a good doctor and trying to recover in the most costeffective way,what else should you pay mind to?

A very important idea might be avoiding contracting any contagious diseases in the hospital.So where might people be likely to get infected? The hospital toilet? The packed register hall? The fact is probably beyond your expectation—Donald Redelmeier,a Canadian doctor and psychologist,took interest in cross-infections in hospitals.As an ingenious medical expert,he went to three big hospitals in Toronto and wiped every corner of the hospital with cotton swabs and petri dishes.Finally he found that the biggest source of bacteria colonization in hospitals comes from the elevator buttons,the result of which could be found in his thesis “Elevator Buttons as Unrecognized Sources of Bacterial Colonization in Hospitals.”

People tend to question this finding because elevator buttons are less noticeable compared to the hospital lobby,the disinfectantsmelling toilet lid and the front desk where you fetch your medicine.

Similar phenomena can equally be found in the investment market.At the end of October of 2018,Kweichow Moutai Co.,Ltd.released its third quarter finance report,which indicated that its deferred revenue increase dropped by 44%compared with the same period last year,which set many investors pondering that Moutai buyers(especially distributors) must be less optimistic about Moutai’s prospect.They chose to hoard less Moutai products,resulting in the downfall of the trading price of Moutai in the secondary stock market on that day.

But in fact,if investors had reviewed the recent news on Kweichow Moutai,they would have realized that the main reason for the decrease in Moutai’s deferred revenue was that the newly elected manager had made some changes to Moutai’s financial system after he took office.He reduced the time cycle from deferred revenue to goods shipping from 3～4 months to 1 month.

People tend to think that,Yangzhou is closer to Beijing than Nanjing,the hospital toilet is for sure more contagious than the elevator buttons,and the profit decline of a listed company definitely reveals some hidden problems—but that’s just not the case.It’s not exactly difficult to obtain accurate information nowadays which can help people form opinions.All they need to do is to go online and use their search engines to locate some mindchanging ideas and facts.However,when confronted with some specific problems,most people are likely to make wrong judgments.

Why? It is well known that a person’s cognitive world is made up with three parts: a known realm,an unknown realm,and an unknowable realm.The most efficient and rational decisionmaker’s approach would be to expand the scope of the known realm,minimize the field of the unknown realm,and waste no time in the unknowable realm.

However,statistics indicate that most people rely heavily on their intuition,which is a gift of human evolution.Depending on one’s intuition can save time and energy with judgment,which was important for primitive men living in the African wildness.But now,it sounds weird enough that many people are more likely to be fixated on things like boredom and weight loss.

So both investors and common folks shall be cautious when making decisions.What prevents us from being rational and efficient is not the lack of information but our heavy dependence on the world we already know,and our tendency to formulate the unknown domain in light of the already existed knowledge and experience.In many occasions,time is less considered for the pleasure people get out of such formulation feels so much better than the struggles they have when they approach the unknown.

When the thought patterns of most people are like this,a minority of people who think otherwise may take advantage and gain profit.I’m not sure,though,whether the pleasure of profit by the minority can outshine their suffering in abandoning their intuitions.