In design, mental models are the constructs that people make in their heads in order to understand how a product works. If they can’t create a mental model of the product, then likely they won’t be able to adequately use it well, if at all. Often, poor products can be traced back to the fact that the product didn’t adequately help create a mental model for its users (via visual/haptic/sound cues, affordances, and instruction).
It seems to me that part of the recent economic crisis can be traced to the fact that brokers and financial institutions did not have an adequate mental model of what it was they were actually selling, and thus couldn’t correctly “use” the products. Products, which, as it turned out, were dangerous as hell and ended up exploding. It’s common sense that if you cannot understand a tool, you probably shouldn’t use it. But they did, and here we are.
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It’s no coincidence that the same type of brain power that brought us the atomic bomb was leveraged in the invention of financial products like derivatives, which Warren Buffet called “weapons of mass destruction.”
The reason cited for the lack of oversight and regulation of these spooky markets was that the banks were filled with smarty pants, and the short bus kids from the government would never understand & would just hold back progress.