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A THREAD on short notes on mental models which I find most insightful
Hope you find it useful
1/
The Map is not the Territory:
Maps are imperfect reductions of the actual reality. A map can also be a snapshot of a point in time, which no longer exists.
Hope you find it useful
1/
The Map is not the Territory:
Maps are imperfect reductions of the actual reality. A map can also be a snapshot of a point in time, which no longer exists.
2/
Circle of Competence:
If you are honest about what you truly understand, you know where you have an edge over others. And you also know where your knowledge is lacking, so that you can improve.
Circle of Competence:
If you are honest about what you truly understand, you know where you have an edge over others. And you also know where your knowledge is lacking, so that you can improve.
3/
First Principles Thinking:
Helps clarify complicated problems by separating the underlying fundamental ideas or facts. By knowing the essentials, it can help unleash creative possibility.
First Principles Thinking:
Helps clarify complicated problems by separating the underlying fundamental ideas or facts. By knowing the essentials, it can help unleash creative possibility.
4/
Thought Experiment:
Imagination used to investigate the nature of things. They can also open up new avenues for inquiry and exploration.
Thought Experiment:
Imagination used to investigate the nature of things. They can also open up new avenues for inquiry and exploration.
5/
Second Order Thinking:
Not only considering our actions and their immediate consequences, but the subsequent effects of those actions as well. We usually do first-order thinking which is easy and safe, but it is often at odds with second order thinking.
Second Order Thinking:
Not only considering our actions and their immediate consequences, but the subsequent effects of those actions as well. We usually do first-order thinking which is easy and safe, but it is often at odds with second order thinking.
6/
Probabilistic Thinking:
It helps us identify the most likely outcomes in a world influenced by a variety of complex factors. Using math & logic, we can improve the accuracy of our decisions.
Probabilistic Thinking:
It helps us identify the most likely outcomes in a world influenced by a variety of complex factors. Using math & logic, we can improve the accuracy of our decisions.
7/
Inversion:
Most of us tend to think one way about a problem: forward. Inversion allows us to flip the problem around and think backward.
8/
Occam's Razor:
Simpler explanations are more likely to be true than complicated ones.
Inversion:
Most of us tend to think one way about a problem: forward. Inversion allows us to flip the problem around and think backward.
8/
Occam's Razor:
Simpler explanations are more likely to be true than complicated ones.
9/
Hanlon's Razor:
We should not attribute to malice that which is more easily explained by stupidity. This demands that we ask if there is another reasonable explanation for the events that have occurred and reminds us that people do make mistakes.
Hanlon's Razor:
We should not attribute to malice that which is more easily explained by stupidity. This demands that we ask if there is another reasonable explanation for the events that have occurred and reminds us that people do make mistakes.
10/
Relativity:
An observer cannot truly understand a system of which he himself is a part.
Relativity:
An observer cannot truly understand a system of which he himself is a part.
11/
Leverage:
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.
Leverage:
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.
12/
Homeostasis:
Process through which systems self-regulate to maintain an equilibrium state that enables them to function in a changing environment. It is important to understand the limits of the range.
Homeostasis:
Process through which systems self-regulate to maintain an equilibrium state that enables them to function in a changing environment. It is important to understand the limits of the range.
13/
Scale:
Systems are sensitive to scale. Properties (or behaviors) tend to change when you scale them up or down.
Scale:
Systems are sensitive to scale. Properties (or behaviors) tend to change when you scale them up or down.
14/
Margin of Safety and Backup Systems:
Without the application of this robustness principle, tangible and intangible systems tend to fail over time. A good engineer never assumes perfect reliability & builds in redundancy to protect the integrity of the total system.
Margin of Safety and Backup Systems:
Without the application of this robustness principle, tangible and intangible systems tend to fail over time. A good engineer never assumes perfect reliability & builds in redundancy to protect the integrity of the total system.
15/
Algorithms:
An automated set of rules or a “blueprint” leading a series of steps or actions resulting in a desired outcome, and often stated in the form of a series of “If → Then” statements.
Algorithms:
An automated set of rules or a “blueprint” leading a series of steps or actions resulting in a desired outcome, and often stated in the form of a series of “If → Then” statements.
16/
Compounding:
Money is not the only thing that compounds; ideas and relationships do as well. In tangible realms, compounding is always subject to physical limits and diminishing returns; intangibles can compound more freely.
Compounding:
Money is not the only thing that compounds; ideas and relationships do as well. In tangible realms, compounding is always subject to physical limits and diminishing returns; intangibles can compound more freely.
17/
Randomness:
Much of the world is composed of random, non-sequential, non-ordered events. We are “fooled” by random effects when we attribute causality to things that are actually outside of our control.
Randomness:
Much of the world is composed of random, non-sequential, non-ordered events. We are “fooled” by random effects when we attribute causality to things that are actually outside of our control.
18/
Global and Local Maxima:
They help us identify peaks, and if there is still potential to go higher or lower. It also reminds us that sometimes we have to go down to go back up.
Global and Local Maxima:
They help us identify peaks, and if there is still potential to go higher or lower. It also reminds us that sometimes we have to go down to go back up.
19/
Opportunity Cost:
Doing one thing means not being able to do another. When we say "yes" to one thing, we say "no" to all the other alternatives.
20/
Marginal Utility (Diminishing/Increasing):
This idea allows us to understand the value of one additional unit.
Opportunity Cost:
Doing one thing means not being able to do another. When we say "yes" to one thing, we say "no" to all the other alternatives.
20/
Marginal Utility (Diminishing/Increasing):
This idea allows us to understand the value of one additional unit.
21/
Arbitrage:
It exists if an identical good can be bought in one market and sold at a profit in the other. Nearly all arbitrage situations eventually disappear as they are discovered and exploited.
Arbitrage:
It exists if an identical good can be bought in one market and sold at a profit in the other. Nearly all arbitrage situations eventually disappear as they are discovered and exploited.
22/
Trust:
Modern world operates on trust. A non-familial trusting system is one that tends to work most efficiently; the rewards of trust are extremely high.
Trust:
Modern world operates on trust. A non-familial trusting system is one that tends to work most efficiently; the rewards of trust are extremely high.
23/
Tendency to Distort Due to Liking/Disliking:
Humans have a tendency to distort their thinking in favor of people or things that they like and against people or things they dislike. Missing truth in the process.
Tendency to Distort Due to Liking/Disliking:
Humans have a tendency to distort their thinking in favor of people or things that they like and against people or things they dislike. Missing truth in the process.
24/
Availability Heuristic:
We tend to most easily recall what is salient, important, frequent, and recent. Some sub-examples of the availability heuristic include the Anchoring and Sunk Cost Tendencies.
Availability Heuristic:
We tend to most easily recall what is salient, important, frequent, and recent. Some sub-examples of the availability heuristic include the Anchoring and Sunk Cost Tendencies.
25/
Social Proof:
We have a DNA-level instinct to seek safety in numbers and will look for social guidance of our behavior. It sometimes leads us to do foolish things.
Social Proof:
We have a DNA-level instinct to seek safety in numbers and will look for social guidance of our behavior. It sometimes leads us to do foolish things.
26/
Narrative Instinct:
Humans have been appropriately called “the storytelling animal” because of our instinct to construct and seek meaning in narrative.
Narrative Instinct:
Humans have been appropriately called “the storytelling animal” because of our instinct to construct and seek meaning in narrative.
27/
Curiosity Instinct:
Even before there were direct incentives to innovate, humans innovated out of curiosity. It led us to learn a great deal about the world around us.
Curiosity Instinct:
Even before there were direct incentives to innovate, humans innovated out of curiosity. It led us to learn a great deal about the world around us.
28/
First-Conclusion Bias:
Our tendency to settle on first conclusions leads us to accept many erroneous results and cease asking questions.
First-Conclusion Bias:
Our tendency to settle on first conclusions leads us to accept many erroneous results and cease asking questions.
29/
Tendency to Overgeneralize from Small Samples:
We take a small number of instances and create a general category, even if we have no statistically sound basis for the conclusion.
Tendency to Overgeneralize from Small Samples:
We take a small number of instances and create a general category, even if we have no statistically sound basis for the conclusion.
30/
Commitment & Consistency Bias:
Humans are subject to a bias towards keeping their prior commitments and staying consistent with our prior selves when possible. But, sometimes this bias can become a “hobgoblin of foolish minds”.
Commitment & Consistency Bias:
Humans are subject to a bias towards keeping their prior commitments and staying consistent with our prior selves when possible. But, sometimes this bias can become a “hobgoblin of foolish minds”.
31/
Hindsight Bias:
We often reason that we knew it all along (whatever “it” is), when in fact we are often simply reasoning post-hoc with information not available to us before the event. It's important to re-examine our beliefs honestly.
Hindsight Bias:
We often reason that we knew it all along (whatever “it” is), when in fact we are often simply reasoning post-hoc with information not available to us before the event. It's important to re-examine our beliefs honestly.
32/
Sensitivity to Fairness:
What is seen as fair and just in one time and place may not be in another.
Sensitivity to Fairness:
What is seen as fair and just in one time and place may not be in another.
33/
Fundamental Attribution Error:
Our tendency to overestimate consistency of behavior. We tend to over-ascribe the behavior of others to their innate traits rather than to situational factors.
Fundamental Attribution Error:
Our tendency to overestimate consistency of behavior. We tend to over-ascribe the behavior of others to their innate traits rather than to situational factors.
34/
Survivorship Bias:
We over-attribute success to things done by the successful agent rather than to randomness or luck. We do not see what Nassim Taleb calls the “silent grave” – the lottery ticket holders who did not win.
Survivorship Bias:
We over-attribute success to things done by the successful agent rather than to randomness or luck. We do not see what Nassim Taleb calls the “silent grave” – the lottery ticket holders who did not win.
35/
Boredom Syndrome:
We tend to offer solutions even when we do not have knowledge to solve the problem.
36/
Confirmation Bias:
What we believe is what we choose to see.
Boredom Syndrome:
We tend to offer solutions even when we do not have knowledge to solve the problem.
36/
Confirmation Bias:
What we believe is what we choose to see.
37/
Antifragility:
It's the opposite of fragility, and beyond resilience/robustness. It's a property of systems that thrive as a result of stressors, shocks, volatility, noise, mistakes, faults, attacks, or failures.
Antifragility:
It's the opposite of fragility, and beyond resilience/robustness. It's a property of systems that thrive as a result of stressors, shocks, volatility, noise, mistakes, faults, attacks, or failures.
38/
Gresham's Law:
Bad drives out good as time passes. Avoid becoming part of systems where good behavior cannot win.
Gresham's Law:
Bad drives out good as time passes. Avoid becoming part of systems where good behavior cannot win.
39/
Lindy Effect:
Future life expectancy of some non-perishable things like a technology or an idea is proportional to their current age, so that every additional period of survival implies a longer remaining life expectancy.
Lindy Effect:
Future life expectancy of some non-perishable things like a technology or an idea is proportional to their current age, so that every additional period of survival implies a longer remaining life expectancy.
40/
Plank/Chauffeur Knowledge:
Learning to distinguish between the two types. Planck knowledge - people who really know. Chauffeur knowledge -they’ve learned the talk. They’ll make a hell of an impression but they don't really know.
Plank/Chauffeur Knowledge:
Learning to distinguish between the two types. Planck knowledge - people who really know. Chauffeur knowledge -they’ve learned the talk. They’ll make a hell of an impression but they don't really know.
41/
Reversion to the Mean:
Outcomes will get closer to the mean as they increase.
Reversion to the Mean:
Outcomes will get closer to the mean as they increase.
42/
Incentive Bias:
Incentives are what drive human behavior. Understanding incentives is the key to understanding people. Conversely, failing to recognize the importance of incentives often leads us to make major errors.
Incentive Bias:
Incentives are what drive human behavior. Understanding incentives is the key to understanding people. Conversely, failing to recognize the importance of incentives often leads us to make major errors.
43/
Matthew Effect/Cumulative Advantage:
A social phenomenon often linked to the idea that the rich get richer and the poor get poorer.
Matthew Effect/Cumulative Advantage:
A social phenomenon often linked to the idea that the rich get richer and the poor get poorer.
44/
Entropy:
Entropy always increases with time. It is the natural tendency of things to lose order. Left to its own devices, life will always become less structured. But with effort, we can create stability, structure, and simplicity.
Entropy:
Entropy always increases with time. It is the natural tendency of things to lose order. Left to its own devices, life will always become less structured. But with effort, we can create stability, structure, and simplicity.
45/
Game Theory:
Applies to a wide range of behavioral interactions among interdependent decision-makers. Zero-sum games vs Positive-sum games.
Game Theory:
Applies to a wide range of behavioral interactions among interdependent decision-makers. Zero-sum games vs Positive-sum games.
46/
Loss Aversion:
People's tendency to prefer avoiding losses to acquiring equivalent gains. One who loses $100 will lose more satisfaction than another person will gain satisfaction from a $100 windfall.
Loss Aversion:
People's tendency to prefer avoiding losses to acquiring equivalent gains. One who loses $100 will lose more satisfaction than another person will gain satisfaction from a $100 windfall.
47/
Tribalism:
A way of thinking or behaving in which people are loyal to their social group above all else. In other words, it is a type of discrimination or animosity based upon group differences. It's a programming of human evolution.
Tribalism:
A way of thinking or behaving in which people are loyal to their social group above all else. In other words, it is a type of discrimination or animosity based upon group differences. It's a programming of human evolution.
48/
Illusion of Control:
Tendency for people to overestimate their ability to control events. It occurs when someone feels a sense of control over outcomes that they demonstrably do not influence.
Illusion of Control:
Tendency for people to overestimate their ability to control events. It occurs when someone feels a sense of control over outcomes that they demonstrably do not influence.
49/
Pareto Principle:
80% of consequences come from 20% of the causes, asserting an unequal relationship between inputs and outputs. Relationship between inputs and outputs is not balanced.
Pareto Principle:
80% of consequences come from 20% of the causes, asserting an unequal relationship between inputs and outputs. Relationship between inputs and outputs is not balanced.
50/
Anchoring bias:
We tend to rely too heavily on an initial piece of information—the “anchor”—when making decisions.
51/
Hyperbolic discounting:
Given two similar rewards, people show a preference for one that arrives sooner rather than later.
Anchoring bias:
We tend to rely too heavily on an initial piece of information—the “anchor”—when making decisions.
51/
Hyperbolic discounting:
Given two similar rewards, people show a preference for one that arrives sooner rather than later.
52/
Mere-exposure effect:
People tend to develop a preference for things merely because they are familiar with them.
53/
Reciprocity:
The expectation that we repay in kind what another has done for us.
Mere-exposure effect:
People tend to develop a preference for things merely because they are familiar with them.
53/
Reciprocity:
The expectation that we repay in kind what another has done for us.
54/
Surfing:
The business principle of “riding the wave” of a new technology, product, or trend.
55/
Scenario Analysis:
Analyzing possible future events by considering alternative possible outcomes.
Surfing:
The business principle of “riding the wave” of a new technology, product, or trend.
55/
Scenario Analysis:
Analyzing possible future events by considering alternative possible outcomes.
56/
Lateral Thinking:
Solving problems through an indirect and creative approach, using reasoning that is not immediately obvious and involving ideas that may not be obtainable by using only traditional step-by-step logic.
Lateral Thinking:
Solving problems through an indirect and creative approach, using reasoning that is not immediately obvious and involving ideas that may not be obtainable by using only traditional step-by-step logic.
57/
Divergent Thinking:
A method used to generate creative ideas by exploring many possible solutions.
58/
Proxy:
In order for a variable to be a good proxy, it must have a close correlation, not necessarily linear, with the variable of interest.
Divergent Thinking:
A method used to generate creative ideas by exploring many possible solutions.
58/
Proxy:
In order for a variable to be a good proxy, it must have a close correlation, not necessarily linear, with the variable of interest.
59/
Simpson's Paradox:
A paradox in probability and statistics, in which a trend appears in different groups of data but disappears or reverses when these groups are combined.
60/
Decision Trees:
A tree-like graph or model of decisions and their possible consequences.
Simpson's Paradox:
A paradox in probability and statistics, in which a trend appears in different groups of data but disappears or reverses when these groups are combined.
60/
Decision Trees:
A tree-like graph or model of decisions and their possible consequences.
61/
Ad hominem Fallacy:
When, instead of addressing someone's argument or position, you irrelevantly attack the person or some aspect of the person who is making the argument.
Ad hominem Fallacy:
When, instead of addressing someone's argument or position, you irrelevantly attack the person or some aspect of the person who is making the argument.
62/
Straw Man Fallacy:
When someone takes another person's argument or point, distorts it or exaggerates it in some kind of extreme way, and then attacks the extreme distortion, as if that is really the claim the first person is making.
Straw Man Fallacy:
When someone takes another person's argument or point, distorts it or exaggerates it in some kind of extreme way, and then attacks the extreme distortion, as if that is really the claim the first person is making.
63/
Growth/Fixed Mindset:
Fixed mindset - abilities are mostly innate and interpret failure as the lack of necessary basic abilities. Growth mindset - they can acquire any given ability provided they invest effort or study.
Growth/Fixed Mindset:
Fixed mindset - abilities are mostly innate and interpret failure as the lack of necessary basic abilities. Growth mindset - they can acquire any given ability provided they invest effort or study.
64/
Minimum Viable Product (MVP):
A product with just enough features to gather validated learning about the product and its continued development.
65/
Paradox of Choice:
“Eliminating consumer choices can greatly reduce anxiety for shoppers.”
Minimum Viable Product (MVP):
A product with just enough features to gather validated learning about the product and its continued development.
65/
Paradox of Choice:
“Eliminating consumer choices can greatly reduce anxiety for shoppers.”
66/
Strategy vs Tactics:
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” - Sun Tzu
Strategy vs Tactics:
“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” - Sun Tzu
67/
Information Asymmetry:
An imbalance of information between buyers and sellers can lead to inefficient outcomes in certain markets.
Information Asymmetry:
An imbalance of information between buyers and sellers can lead to inefficient outcomes in certain markets.
68/
Deliberate Practice:
How expert one becomes at a skill has more to do with how one practices than with merely performing a skill a large number of times.
Deliberate Practice:
How expert one becomes at a skill has more to do with how one practices than with merely performing a skill a large number of times.
