Mental Models

This page will always be a work in progress. It houses all of the mental models that I am learning about and building into the bedrock of my thinking and decision making. It's the master page, summarizing each mental model that I've worked on. Each summarized model links to a page where I explore it in more depth.

The goal of this project is first to understand these models, and then to actually use them in real life, which I find to be the hardest part.

It's one thing to collect models and organize them neatly. It's an entirely different thing to actually put a model into practice so many times that it becomes part of your unconscious decision-making process.

I got most of these from Farnam Street and Poor Charlie’s Almanack, though I’ve added in dozens of my own as well.

Last Updated: December 8, 2016

Psychology

Tilt - ​A frustrated, confused state of mind caused by the emotional stress of losing. Happens a lot in strategic games that have an element of luck, like poker. Tilting is best thought of as a degradation of your skill level, so tilting less allows you to beat people that are actually better than you, because you're playing at your skill cap more often than they are.

Read the full article about Tilt.

Do / Say Something Syndrome - ​We often confuse activity for results. Sometimes, the best thing to do or say in the face of a problem, question, or situation, is nothing at all.

Read the full article about Do / Say Something Syndrome.

Availability Heuristic

  • ​Ease of Recall
  • Retrievability

Representativeness Heuristic

  • ​Insensitivity to base rates
  • Insensitivity to sample size
  • Misconceptions of chance
  • Regression to the mean
  • Bias from conjunction fallacy

Other Biases

  • Incentives and Reinforcement Bias
  • Self-Interest Bias
  • Asssociation bias
  • Liking / Loving bias
  • Disliking / Hating Bias
  • Commitment and Consistency Bias
  • Excessive Fairness Bias
  • Envy and Jealousy Bias
  • Reciprocation Bias
  • Over-Influence From Authority
  • Deprival Super-Reaction Syndrome
  • Contrast Bias
  • Stress-Influence Bias
  • Emotional Arousal Bias
  • Physical or Psychological Pain Bias
  • Mis-reading People and Their Character Bias
  • Attribution Error
  • Status Quo Bias
  • Do Nothing tendency
  • Over-Influence From Precision / Models
  • Simplicity Bias
  • Uncertainty Avoidance
  • Ideological Bias
  • "Not Invented Here" Bias
  • Over-Weighting The Short Term Bias
  • Tendency to Avoid Extremes
  • Man With A Hammer Bias
  • Social Proof Bias
  • Over-Influence From Framing Effects
  • Lollapalooza

Business

  • ​Ability to Raise Prices
  • Scale
  • Distribution
  • Cost
  • Brand
  • Improving Returns
  • Porters 5 Forces
  • Decision Trees
  • Diminishing Returns
  • Double Entry Accounting

Investing

  • ​Mr. Market
  • Circle of competence

Ecology

  • ​Complex adaptive systems
  • Systems Thinking

Economics

Pareto Principle - ​Most things in life (effort, reward, output) are not distributed evenly. You take take advantage of this by isolating the inputs that lead to most of the output in any area. However, this is easy to over-apply. 

Read the full article about the Pareto Principle.​

  • ​Utility
  • Diminishing Utility
  • Supply and Demand
  • Scarcity
  • Elasticity
  • Economies of Scale
  • Opportunity Cost
  • Marginal Cost
  • Comparative Advantage
  • Trade-offs
  • Price Discrimination
  • Positive and Negative Externalities
  • Sunk Costs
  • Moral Hazard
  • Game Theory
  • Prisoners’ Dilemma
  • Tragedy of the Commons
  • Bottlenecks
  • Time value of Money

Engineering

  • ​Feedback loops
  • Redundancy
  • Margin of Safety
  • Tight coupling
  • Breakpoints

Mathematics

  • Bayes Theorem
  • Power Law
  • Law of large numbers
  • Compounding
  • Probability Theory
  • Permutations
  • Combinations
  • Variability
  • Standard Deviation and normal distribution
  • Regression to the mean
  • Inversion

Statistics

  • ​Outliers and self fulfilling prophecy4
  • Correlation versus Causation
  • Mean, Median, Mode
  • Distribution

Chemistry

  • ​Thermodynamics
  • Kinetics
  • Autocatalysis

Physics

  • ​Newton’s Laws
  • Momentum
  • Quantum Mechanics
  • Critical Mass
  • Equilibrium

Biology​

  • ​Natural Selection

Other Mental Models

​Information Asymmetry - A situation where one one party has more information than the other. They can also have the same amount, but higher quality. Either case gives the party with more / better information a huge advantage. Shows up a lot in investing and games like poker.

Read the full article about Information Asymmetry.

Coming Soon: 

  • Occam’s Razor
  • Deduction and Induction
  • Basic Decision Making Process
  • Scientific Method
  • Process versus Outcome
  • And then what?
  • The Agency Problem
  • 7 Deadly Sins
  • Network Effect
  • Gresham’s Law
  • The Red Queen Effect