As human beings, we have quite severe information processing limits. According to psychology research, we can keep 7 +/- 2 concepts in our head at the same time as we think about something. This is why we build abstractions, which is what you learn in school, so that we can refer to something complex with one word or concept. That allows us to think about even bigger ideas. The challenge is that, as life unfolds, we do not have the concepts available to explain what is happening in the world as we lack good explanations and concepts to refer to. As I post this, NVIDIA just posted much better numbers for the quarter than what was expected. Suddenly the entire media switches on a dime from “we’re in an AI bubble” to “AI is real and not a bubble”. Although I think that there is a fair bit of hyperbole in the discussion around AI, the statements about not seeing AI in productivity improvements in industry as some of the larger consulting houses shared are, in my experience, simply wrong. In software, AI is used everywhere and is allowing for major productivity improvements for engineers. And the same is true in many other disciplines. The challenge is that our rationality is bounded. We lack the ability to take in the whole system and consequently build explanations based on a sliver of the reality we’re looking to understand. Some systems, including our economic system, simply are too complex to be explained. That is why nobody can predict the stock market a day, a week or a month from now. However, we hate that and consequently come up with explanations that make us feel good (reduced cognitive dissonance), but that don’t help us as the explanation is not connected to reality. Sometimes, we simply have to accept that we don’t know. So, as my challenge to you today is: where are you clinging to a simplistic explanation that is wrong, but gives you emotional support. And how do you move on from it?