The Best Psychology Way to Make Intelligent Decisions:
"20 Mental Models to Add to Your Thinking Toolbox."
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"20 Mental Models to Add to Your Thinking Toolbox."
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A mental model explains someone's thought process about how something works in the real world.
They shape how we think and how we understand.
We need them to simplify the complexities and reason.
They shape how we think and how we understand.
We need them to simplify the complexities and reason.
We can’t keep all of the details of the world in our brains, so we use mental models
The quality of our thinking is the quality of the models in our head
> The more models you have
> The bigger your toolbox
> The more likely you are to have the right ones in the right situation
The quality of our thinking is the quality of the models in our head
> The more models you have
> The bigger your toolbox
> The more likely you are to have the right ones in the right situation
Most of us are specialists, looking at the problem only one way:
• Engineers think in systems,
• Biologists think in terms of evolution,
• Psychologists think in terms of incentives…
But if you put these together, you can see a problem in 3 dimensional way.
• Engineers think in systems,
• Biologists think in terms of evolution,
• Psychologists think in terms of incentives…
But if you put these together, you can see a problem in 3 dimensional way.
“You can’t really know anything if you just remember isolated facts and try and bang ’em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form. You’ve got to have models in your head.”
- Charlie Munger
- Charlie Munger
1. Inversion Mental Model
Rather than thinking about your desired outcome, consider the outcome you'd like to avoid.
"Avoiding stupidity is easier than seeking brilliance."
Rather than thinking about your desired outcome, consider the outcome you'd like to avoid.
"Avoiding stupidity is easier than seeking brilliance."
2. Occam's Razor
The simplest explanation is usually the correct one.
If you're trying to understand what happened, develop the most basic hypothesis possible.
The simplest explanation is usually the correct one.
If you're trying to understand what happened, develop the most basic hypothesis possible.
3. Jealousy Tendency
There are two types of envy:
- The productive type is "inferiority"
- The unproductive type is “malicious envy”
One motivates you to raise yourself up to another person’s level.
One makes you take something valuable from someone else.
There are two types of envy:
- The productive type is "inferiority"
- The unproductive type is “malicious envy”
One motivates you to raise yourself up to another person’s level.
One makes you take something valuable from someone else.
4. Backward Reasoning
This starts with a list of goals and works backward from the consequent to the antecedent.
It is known as the goal-driven technique because we start from the goal and reach the initial state to extract the facts.
This starts with a list of goals and works backward from the consequent to the antecedent.
It is known as the goal-driven technique because we start from the goal and reach the initial state to extract the facts.
5. Circle of Competence
When ego drives you, you have blind spots.
When you’re honest with yourself, you know where you’re vulnerable and where you can improve.
Understanding your circle of competence improves decision-making and outcomes.
When ego drives you, you have blind spots.
When you’re honest with yourself, you know where you’re vulnerable and where you can improve.
Understanding your circle of competence improves decision-making and outcomes.
6. Diminishing Returns
The incremental benefits you get from an investment get increasingly smaller.
The sooner you notice diminishing returns, the sooner you can jump on the projects that are more valuable to your business's growth.
The incremental benefits you get from an investment get increasingly smaller.
The sooner you notice diminishing returns, the sooner you can jump on the projects that are more valuable to your business's growth.
7. Thought Experiment
When finding empirical evidence is impossible, we turn to thought experiments to understand complex concepts.
In doing so, you can open up new avenues for inquiry and exploration.
Thought experiments help us learn from our mistakes and avoid future ones.
When finding empirical evidence is impossible, we turn to thought experiments to understand complex concepts.
In doing so, you can open up new avenues for inquiry and exploration.
Thought experiments help us learn from our mistakes and avoid future ones.
8. Pareto Principle
Known as the 80/20 rule; most results aren't distributed equally.
• 20% of your traffic yields 80% of your leads
• 20% of the work generates 80% of the returns
• 20% of your time produces 80% of your results
Known as the 80/20 rule; most results aren't distributed equally.
• 20% of your traffic yields 80% of your leads
• 20% of the work generates 80% of the returns
• 20% of your time produces 80% of your results
9. Relativity
“If the earth is moving through space, how come I don’t notice?”
The answer is “Relativity”!
It can also show us the limits of our perception. And how we must be open to other perspectives if we truly want to understand the results of our actions.
“If the earth is moving through space, how come I don’t notice?”
The answer is “Relativity”!
It can also show us the limits of our perception. And how we must be open to other perspectives if we truly want to understand the results of our actions.
10. Leverage
“Give me a lever long enough, and I shall move the world.”
With a small amount of input force, we can make a great output force through leverage.
Understanding where we can apply this model to the human world can be a source of great success.
“Give me a lever long enough, and I shall move the world.”
With a small amount of input force, we can make a great output force through leverage.
Understanding where we can apply this model to the human world can be a source of great success.
11. Incentives
All creatures respond to incentives to keep themselves alive.
Sometimes the solution to a behavior problem is simply to revisit incentives and make sure they align with the desired goal.
The rule of life is to repeat what works and has been rewarded.
All creatures respond to incentives to keep themselves alive.
Sometimes the solution to a behavior problem is simply to revisit incentives and make sure they align with the desired goal.
The rule of life is to repeat what works and has been rewarded.
12. Feedback Loops
Feedback loops are created when reactions affect themselves.
A key lesson of feedback loops is that things are connected; changing one variable will affect other variables in that system and other systems.
Feedback loops are created when reactions affect themselves.
A key lesson of feedback loops is that things are connected; changing one variable will affect other variables in that system and other systems.
13. Illusion of Control
The illusion of control is a bias that leads us to assume that we have complete control over the outcome of a situation in an instance where we do not.
Not everything in life is within our control.
The illusion of control is a bias that leads us to assume that we have complete control over the outcome of a situation in an instance where we do not.
Not everything in life is within our control.
14. Margin of Safety
Engineers have developed the habit of adding a margin for error into all calculations.
You can think of it as a reservoir to absorb errors or poor luck.
Size matters! (At least in this case)
Engineers have developed the habit of adding a margin for error into all calculations.
You can think of it as a reservoir to absorb errors or poor luck.
Size matters! (At least in this case)
15. Randomness
Much of the world is composed of random, non-sequential, non-ordered events.
“Life is randomness, don’t expect to understand it. Learn to live it.” – Evol
Some events are impossible to predict.
Much of the world is composed of random, non-sequential, non-ordered events.
“Life is randomness, don’t expect to understand it. Learn to live it.” – Evol
Some events are impossible to predict.
16. Opportunity Costs
Doing one thing means not being able to do another.
We live in a world of trade-offs, and the concept of opportunity cost rules all.
Is "the juice worth the squeeze?"
Everything has an opportunity cost.
Doing one thing means not being able to do another.
We live in a world of trade-offs, and the concept of opportunity cost rules all.
Is "the juice worth the squeeze?"
Everything has an opportunity cost.
17. Supply and Demand
Supply and demand is a foundational economic mental model.
Supply: There’s a positive relationship between the price of a good and the quantity supplied.
Demand: There’s an inverse relationship between the price of a good and the quantity demanded.
Supply and demand is a foundational economic mental model.
Supply: There’s a positive relationship between the price of a good and the quantity supplied.
Demand: There’s an inverse relationship between the price of a good and the quantity demanded.
18. Two-Front War
In WW2 once Russia and Germany became enemies Germany was forced to split its troops and send them to a separate front weakening their impact on either front
In practical life avoiding a two-front war is rational. It causes focus and concentration on one job.
In WW2 once Russia and Germany became enemies Germany was forced to split its troops and send them to a separate front weakening their impact on either front
In practical life avoiding a two-front war is rational. It causes focus and concentration on one job.
19. Trust
The world operates on trust. Every day we trust drivers, clerks, chefs, and many others.
A trusting system tends to work most efficiently; the rewards of trust are extremely high.
The world operates on trust. Every day we trust drivers, clerks, chefs, and many others.
A trusting system tends to work most efficiently; the rewards of trust are extremely high.
20. Curiosity Instinct
Curiosity is what led us to learn a great deal about the world around us.
Scientists have a characteristic way of viewing the world and their work: their mindset aim at discovering truths about nature. In An Instinct for Truth; curiosity
Curiosity is what led us to learn a great deal about the world around us.
Scientists have a characteristic way of viewing the world and their work: their mindset aim at discovering truths about nature. In An Instinct for Truth; curiosity
Mental Models mentioned:
1. Inversion Mental Model
2. Occam's Razor
3. Jealousy Tendency
4. Backward Reasoning
5. Circle of Competence
6. Diminishing Returns
7. Thought Experiment
8. Pareto Principle
9. Relativity
10. Leverage
11. Incentives
12. Feedback Loops
1. Inversion Mental Model
2. Occam's Razor
3. Jealousy Tendency
4. Backward Reasoning
5. Circle of Competence
6. Diminishing Returns
7. Thought Experiment
8. Pareto Principle
9. Relativity
10. Leverage
11. Incentives
12. Feedback Loops
13. Illusion of Control
14. Margin of Safety
15. Randomness
16. Opportunity Costs
17. Supply and Demand
18. Two-Front War
19. Trust
20. Curiosity Instinct
14. Margin of Safety
15. Randomness
16. Opportunity Costs
17. Supply and Demand
18. Two-Front War
19. Trust
20. Curiosity Instinct
From Munger to Elon Musk and Jeff Bezos to Bill Gates, mental models are used by the most remarkable people.
A mental model?
Put simply, it’s a psychological explanation of how things work, providing with a new way to see the world; as a result, helping us make sense of reality
A mental model?
Put simply, it’s a psychological explanation of how things work, providing with a new way to see the world; as a result, helping us make sense of reality
If you're looking to think like them, Start reading 100 mental models.
With the help of books, cards, maps, quotes, audiobook,... it will internalize mental models in your head so that you will use them automatically.
Get your copy:
gumroad.com/a/485553267/Ax…
With the help of books, cards, maps, quotes, audiobook,... it will internalize mental models in your head so that you will use them automatically.
Get your copy:
gumroad.com/a/485553267/Ax…
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