2/ Mental models help you focus on understanding how things are than they how things should be.
3 things need to be considered to use mental models/map better.
a) Reality is the ultimate update: maps/models can become outdated. When reality changes, models should change too.
3 things need to be considered to use mental models/map better.
a) Reality is the ultimate update: maps/models can become outdated. When reality changes, models should change too.
3/ b) Consider the cartographer: Think about the context in which the map was created.
c) Maps can influence territories: models have limitation. Don't try to overfit it.
Maps, or models, are necessary but necessarily flawed.
c) Maps can influence territories: models have limitation. Don't try to overfit it.
Maps, or models, are necessary but necessarily flawed.
4/ Circle of competence
When we operate within our circle of competence, we know what we don't know. We understand what is knowable and what is unknowable and can differentiate between the two.
But this circle is NOT static. To build and maintain a circle of competence...
When we operate within our circle of competence, we know what we don't know. We understand what is knowable and what is unknowable and can differentiate between the two.
But this circle is NOT static. To build and maintain a circle of competence...
5/ remain curious, monitor your track record, and asses the feedback from your track record.
While outside of your circle of competence, acknowledge you are stranger there and try to learn at least the basics. Beware though it's the basics that gives unwarranted confidence.
While outside of your circle of competence, acknowledge you are stranger there and try to learn at least the basics. Beware though it's the basics that gives unwarranted confidence.
6/ Falsifiability
The idea is If you can't prove something wrong, you can't really prove it right either. Any good theory must have an element of risk to it i.e. it must be able to be proven wrong in certain conditions.
The idea is If you can't prove something wrong, you can't really prove it right either. Any good theory must have an element of risk to it i.e. it must be able to be proven wrong in certain conditions.
7/ First Principles Thinking
To cut through the dogma in a particular space, use Socratic questioning and the 5-Why's.
5-Why's is children-like behavior to understand something. If you hear things like "it just is" or "because I said so", you have landed on dogma/myth.
To cut through the dogma in a particular space, use Socratic questioning and the 5-Why's.
5-Why's is children-like behavior to understand something. If you hear things like "it just is" or "because I said so", you have landed on dogma/myth.
8/ Thought experiment
It is useful in:
-Imagining physical impossibilities: Exercises such as The Trolley experiment help us prepare for similarly difficult situations.
-Re-imagining history: Counter-factual narratives can convince us nothing is inevitable in history...
It is useful in:
-Imagining physical impossibilities: Exercises such as The Trolley experiment help us prepare for similarly difficult situations.
-Re-imagining history: Counter-factual narratives can convince us nothing is inevitable in history...
9/ -Intuiting the non-intuitive: John Rawl's "veil of ignorance" may help us formulate policies to build a better society.
10/ Necessity and Sufficiency
To be really successful, hard work is perhaps necessary, but may itself not be sufficient as there are other factors that can come into play. The sufficient set is far larger than the necessary set.
To be really successful, hard work is perhaps necessary, but may itself not be sufficient as there are other factors that can come into play. The sufficient set is far larger than the necessary set.
11/ Second-Order thinking
It's easy to anticipate the immediate result of an action. But the second and third order effects can prove to be far more important to consider.
During colonial period, the British wanted to reduce the cobra epidemic in India and declared rewards...
It's easy to anticipate the immediate result of an action. But the second and third order effects can prove to be far more important to consider.
During colonial period, the British wanted to reduce the cobra epidemic in India and declared rewards...
12/...for every dead cobra. The locals started breeding cobras and then kill them to receive the rewards. The problem became worse than it initially was for not thinking the second-order effects.
In short, it's the effect of effects. Beware of analysis paralysis though.
In short, it's the effect of effects. Beware of analysis paralysis though.
13/ Probabilistic Thinking
3 important aspects of probability:
a) Bayesian thinking: Always incorporate all the information you currently have to build your probability estimates.
b) Fat-tailed curves: If the underlying distribution is fat tailed and not normal...
3 important aspects of probability:
a) Bayesian thinking: Always incorporate all the information you currently have to build your probability estimates.
b) Fat-tailed curves: If the underlying distribution is fat tailed and not normal...
14/ ...it can be disastrous not to take that into account. More people can historically die from stair-slipping than terrorism. But death from stair-slipping is largely normal distribution whereas terrorism related death can have fat-tailed distribution.
c) Asymmetries: It's...
c) Asymmetries: It's...
15/ ...the probability that your probability estimates themselves are any good.
Most people know correlation is not causation, but almost everyone mistakes or misinterprets correlation as causation. Learn to control this urge.
Most people know correlation is not causation, but almost everyone mistakes or misinterprets correlation as causation. Learn to control this urge.
16/ Inversion
Avoiding stupidity is easier than pursuing brilliance. 2 ways to apply inversion:
a) Assume what you're trying to prove is either true or false, then show what else would have to be true.
b) Think deeply about what you want to avoid and see what options are left.
Avoiding stupidity is easier than pursuing brilliance. 2 ways to apply inversion:
a) Assume what you're trying to prove is either true or false, then show what else would have to be true.
b) Think deeply about what you want to avoid and see what options are left.
17/ Here's an example of how inverting your goal can help you make decisions.
If you really just want to avoid underperforming the market, investing in index funds perhaps makes more sense to you.
If you really just want to avoid underperforming the market, investing in index funds perhaps makes more sense to you.
18/ Occam's Razor
The idea is simpler explanations are more likely to be true than complicated ones. While this is mostly true, an important caveat is some things are simply not that simple. Pyramid/Ponzi schemes, for example.
The idea is simpler explanations are more likely to be true than complicated ones. While this is mostly true, an important caveat is some things are simply not that simple. Pyramid/Ponzi schemes, for example.
19/ Hanlon's Razor
The idea is try not to attribute to malice which is more easily explained by stupidity. The explanation most likely to be right is the one that contains the least amount of intent.
Kahneman and Tversky posed the following question in 1982:
"Linda is...
The idea is try not to attribute to malice which is more easily explained by stupidity. The explanation most likely to be right is the one that contains the least amount of intent.
Kahneman and Tversky posed the following question in 1982:
"Linda is...
20/ ...31 years old, single, outspoken, and very bright. She majored in Philosophy. As a student she was deeply concerned with issues of discrimination and social justice, and also participated in anti-nuclear demonstrations.
Which is more probable?
a) Linda is a bank teller...
Which is more probable?
a) Linda is a bank teller...
21/ b) Linda is a bank teller and is active in the feminist movement.
Majority choose B over A. But single condition is more likely to be true than multiple conditions. To say it differently, every feminist bank teller is a bank teller, but not every bank teller is a feminist.
Majority choose B over A. But single condition is more likely to be true than multiple conditions. To say it differently, every feminist bank teller is a bank teller, but not every bank teller is a feminist.
End/ Kahneman and Tversky called it the fallacy of conjunction. We get so enamored by vivid narratives that we tend to violate simple logic.
It's a short book, but not certainly not short on content!
It's a short book, but not certainly not short on content!
*understanding how things are than how things should be
*but certainly not short on content
