HBR IdeaCast: "Steven Pinker on Speculation Bubbles, Super Bowl Ads, and What Leaders Need to Know About Group Psychology"

Date: September 23, 2025
Host(s): Adi Ignatius (A), Alison Beard (B)
Guest: Steven Pinker (C)—Professor of Psychology, Harvard University; author of When Everyone Knows that Everyone Knows: Common Knowledge and the Mysteries of Money, Power, and Everyday Life

Overview

In this episode, Adi Ignatius and Alison Beard interview renowned psychologist Steven Pinker about his new book, which explores the concept of "common knowledge" and its vital role in human behavior, business, finance, social movements, and leadership. Pinker delves into how our understanding of what others know—and what others know we know—influences everything from speculation bubbles to office politics and negotiation. The discussion is rich with examples from economic history, viral phenomena, and cultural moments such as Super Bowl ads and political uprisings, showing the real-world impact of group psychology on leadership and organizations.

Key Discussion Points & Insights

1. Defining Common Knowledge (02:27–05:10)

• Specialized Meaning: Pinker clarifies that "common knowledge" is not just widely held beliefs, but awareness of mutual awareness: “I know something, you know it, you know that I know it…ad infinitum.” (02:38–03:10)
• Importance for Coordination: This mutual knowledge is crucial for coordinated action (e.g., choosing which side of the road to drive on).
• The Emperor’s New Clothes: The classic tale serves as an illustration—once the boy speaks up, it’s not new information, but it becomes common knowledge, enabling societal action (03:33–04:10).

2. Pluralistic Ignorance & Spirals of Silence (04:10–05:43)

• Concept: Sometimes, nobody believes in a norm or idea, but each thinks everyone else does—a phenomenon known as pluralistic ignorance or, in economics, the Abilene Paradox.
• Example: College fraternities where individuals privately reject a tradition but conform because they mistakenly believe others value it.
• Broader Context: Similar dynamics underpin social norms and conformity in various cultures, with striking examples from Saudi Arabia.

3. Speculation Bubbles, Network Effects, and Super Bowl Ads (06:00–12:43)

• Keynesian Beauty Contest: Describes markets where value is based on what people believe others will value—everyone tries to “outguess other people outguessing still other people.” (06:20–07:00)
• Bubbles and Greater Fool Theory: Degeneration into speculation bubbles, as seen in cryptocurrency and meme stocks, is driven by a public signal that others are buying in (07:00–08:06).
• Super Bowl as a Common Knowledge Generator:
  • Ridley Scott’s legendary 1984 Super Bowl ad for Apple’s Macintosh didn’t advertise the product so much as signal to everybody that everybody else was watching, creating a perceived buyership. (08:32–12:31)
  • Other examples: Monster.com and Discover Card launching at the Super Bowl to leverage network effects.
• Quote: “The point of the ad was not to advertise the product. It didn’t say anything about the product, but to advertise the potential buyership.” (C, 10:59)

4. The COVID Toilet Paper Shortage & Bank Runs (12:31–15:06)

• Analogy: Pinker compares panic buying of toilet paper during the pandemic to a bank run—a fear-driven collective action based on what people think others might do.
• Historical Example: Johnny Carson’s joke in 1973 allegedly sparked the enduring belief that toilet paper always runs out in a crisis, again a case of mass behavior triggered by a common knowledge event.
• Quote: “It's true that people were staying home…but Kimberly Clark quickly stepped up production to meet the demand. But somehow people just know that in an emergency, people hoard toilet paper, which can cause the very shortage…” (C, 13:06)

5. Negotiation, Focal Points, and Game Theory (16:05–18:44)

• Negotiation as a Game of Common Knowledge: Success in negotiation relies on shared reference points and the awareness of mutual interest (16:26–18:44).
• Focal Points (Schelling Points): In ambiguous negotiations, people often settle on round numbers or splits simply because they suspect the other party will recognize them as “obviously fair.”
• Quote: “A salesman who announced that his rock bottom price for the car is $30,007.26 is pretty much pleading to be relieved of $7.26…What’s special is other people can think it’s special…” (C, 17:56)

6. Fragmentation of Common Knowledge in Modern Media (18:44–20:44)

• Media Fragmentation & Polarization: Pinker notes that while nostalgia for a unified fact set is perhaps misplaced, today’s fractured media ecosystems foster competing pools of common knowledge, which can erode societal consensus.
• Examples: The era of three TV networks vs. today’s closed, partisan media bubbles.

7. Leadership, Company Culture, and Common Knowledge (20:44–22:38)

• Building Positive Organizational Knowledge: Effective leaders can generate common knowledge through conspicuous, public acts—such as companywide meetings or clear messages.
• Public Signals: Pinker equates Fed chair pronouncements with this—markets react not to the facts but to what they believe others have heard.
• Quote: “Statements from the Fed are scrutinized…anything that the chairman of the Fed says can create its own reality when people, knowing that other people have heard it, will act on it…” (C, 21:29)

8. Social Change, Authoritarian Regimes, and the Power of Public Acts (22:38–25:31)

• Dictatorship and Protest: Pinker explains why authoritarian leaders fear public dissent—mass action is only possible when individuals believe others will also act.
• The “Blank Page” Protest: Joke from the Soviet era and its real-life inspiration for recent protests in Russia and China; sometimes, simply displaying a blank sign is enough to create common knowledge of dissent.
• Quote: “He didn’t need to say anything because people already knew it, but they didn’t know that everyone else knew it.” (C, 24:45)

9. Practical Applications & Everyday Diplomacy (25:32–27:51)

• Not a ‘How-To’ Manual: Pinker stresses the book offers a lens, not instructions, for navigating coordination problems in all aspects of life, from business to relationships.
• Social Rituals as Coordination Games: Politeness, euphemism, and indirectness are ways of maintaining relationships by avoiding escalation to full common knowledge of sensitive topics.
• Quote: “The most common case of systematic hypocrisy is politeness.…Why do we go through these rituals? Because we don’t want to boss each other around.” (C, 26:50–27:20)

Memorable Quotes & Moments

• On Common Knowledge:
  • “I'm using the term in a specialized sense... I know something, you know it, you know that I know it, I know that you know it... and so on, ad infinitum.” (C, 02:38)
• On Speculative Bubbles:
  • “Speculative bubbles, crypto… are cases where people think that other people in the future will want to buy in—sometimes called the greater fool theory of investing.” (C, 07:20)
• On Advertising:
  • “The Super Bowl is an annual rite in American culture. You know that a lot of people are watching it, and you know that a lot of people know that a lot of people are watching it. It is a common knowledge generator…” (C, 09:33)
• On Leadership:
  • “Common knowledge is generated by something that is conspicuous, public. So face to face meetings can generate common knowledge in a way that, say, remote meetings don’t.” (C, 21:05)
• On Social Rituals:
  • “All the phenomena of politeness, euphemism, innuendo, tact… are cases where people privately know something, but there’s some reason to keep it out of common knowledge.” (C, 27:00)
• On Protest and Authoritarianism:
  • “There just isn’t enough firepower… people can overpower a regime if they all stand up at the same time, if they all storm the palace, if they all stop work. But how can they do it, if each one is afraid that he’ll be the only one?” (C, 23:30)

Timestamps for Important Segments

• Defining Common Knowledge: 02:28–05:10
• Speculation & Market Examples: 06:20–12:31
• Toilet Paper Shortages and Bank Runs: 12:31–15:06
• Negotiation and Game Theory: 16:05–18:44
• Fragmentation of Knowledge in Media: 18:44–20:44
• Applying Concepts to Leadership and Organizations: 20:44–22:38
• Authoritarian Regimes & Social Protest: 22:38–25:31
• Politeness & Diplomatic Hypocrisy: 25:32–27:51

Conclusion

Steven Pinker’s insights give leaders, managers, and anyone interested in group behavior a powerful lens through which to understand how “what everyone knows that everyone knows” shapes markets, organizations, and society at large. Applying the concept of common knowledge both clarifies the mechanics of everything from viral movements to negotiation and highlights the subtle necessity of social rituals and diplomacy. Pinker’s characteristically accessible explanations and real-world examples—from Super Bowl ads to blank page protests—make these complex ideas highly relevant and actionable for today’s leaders.