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Acquiring knowledge may seem like a daunting task. There is so much to know and time is precious. Luckily, we don‘t have to master everything. To get the biggest bang for the buck we can study the big ideas from physics, biology, psychology, philosophy, literature, and sociology. Our aim is not to remember facts and try to repeat them when asked. We‘re going to try and hang these ideas on a latticework of mental models. Doing this puts them in a useable form and enables us to make better decisions. A mental model is simply a representation of an external reality inside your head. Mental models are concerned with understanding knowledge about the world. Decisions are more likely to be correct when ideas from multiple disciplines all point towards the same conclusion. Let‘s explore the big ideas together.
Charlie Munger explains worldly wisdom: Well, the first rule is that 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. And you‘ve got to array your experience both vicarious and direct on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You‘ve got to hang experience on a latticework of models in your head. What are the models? Well, the first rule is that you‘ve got to have multiple models because if you just have one or two that you‘re using, the nature of human psychology is such that you‘ll torture reality so that it fits your models, or at least you‘ll think it does… It‘s like the old saying, ‖To the man with only a hammer, every problem looks like a nail.‖ And of course, that‘s the way the chiropractor goes about practicing medicine. But that‘s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world. So you‘ve got to have multiple models. And the models have to come from multiple disciplines because all the wisdom of the world is not to be found in one little academic department. That‘s why poetry professors, by and large, are so unwise in a worldly sense. They don‘t have enough models in their heads. So you‘ve got to have models across a fair array of disciplines.
only a mere handful really carry very heavy freight. or who had not yet formed any mental models about wild raccoons or snakes. Perception yields models of the world that lie outside us. author of Succeeding offers an important insight: When you first start to study a field. 5. ―My God. A simple example is the mental model of a wild animal as dangerous: upon encountering a raccoon or a snake.(2) Evolution Wikipedia provides the following example of a mental model that‘s been put into us through evolution. People‘s abilities to ―run‖ their models are severely limited. especially when those details (or the whole system) have not been used for sometime. The million things you thought you had to memorize are simply various combinations of the core principles. Mental models are incomplete.You may say. 6. author of The Design of Everyday Things. which enables us to anticipate the world and to choose a course of action. they are willing to trade-off extra physical action for reduced mental complexity. Mental models are unscientific. Retreat is the result of the application of the mental model. Mental models are unstable. How do we think? One answer is that we rely on mental models. And. What you need is to identify the core principles – generally three to twelve of them – that govern the field. relies on internal manipulations of these mental models. 1. Reed. Mental models are parsimonious: Often people do extra physical operations rather then the mental planning that would allow them to avoid those actions. and would probably not be the immediate reaction of one whose mental model of wild animals was formed solely from experience with similar stuffed toy animals.(1) John T. Mental models do not have firm boundaries: similar devices and operations get confused with one another. 4. this is already getting way too tough. People maintain ―superstitious‖ behavior patterns even when they know they are unneeded because they cost little in physical effort and save mental effort. one who holds this model will likely retreat from the animal as if by reflex. You don‘t. it isn‘t that tough because 80 or 90 important models will carry about 90% of the freight in making you a worldly wise person. This is especially true where the extra actions . People forget the details of the system they are using. Thinking. Mental Models Some observations on mental models from Donald Norman. fortunately. 2. An understanding of discourse yields models of the world that the speaker describes to us. it seems like you have to memorize a zillion things. of those. 3.‖ But.
Retrievability Biases emanating from the Representativeness Heuristic 3. thus minimizing the chances for confusion. The Long Tail theory is so catchy it can overgrow its useful boundaries. Misconceptions of chance 6. the Long Tail becomes the proverbial theory hammer looking for nails to pound. threatens to turn a great theory of inventory economics into a bad theory of life and the universe. alternative music.‖ and online universities ―the Long Tail of education. but like many business books. Ease of Recall 2.‖ and he came up with a catchy phrase to go with his observation. Regression to the mean 7. festival films—starts looking like the Long Tail in action. When you put it down. Bias from insensitivity to sample size 5. that there‘s a ―Long Tail of national security‖ in which al-Qaida is a ―supercharged niche supplier. there‘s one question you won‘t be able to answer: When. Unfortunately. Everything you take in—cult blogs. Bias from insensitivity to base rates 4. Inside we learn about ―the Long Tail of Everything. Anderson.allow one simplified rule to apply to a variety of devices.‖ calling offshoring the ―Long Tail of labor. (3) Chris Wu writes about Chris Anderson. ―Why the Future of Business Is Selling Less of More. But that‘s also the problem. the Wired editorin-chief who first wrote about the Long Tail concept in 2004. Chris Anderson‘s The Long Tail does something that only the best books do—uncovers a phenomenon that‘s undeniably going on and makes clear sense of it.‖ He quotes approvingly an analysis that claims. He writes that ―there are now Long Tail markets practically everywhere you look. Bias from conjunction fallacy . unlike his original Wired article. The Farnam Street Latticework of Mental Models Psychology (misjudgments) Biases emanating from the Availability Heuristic: 1. doesn‘t the Long Tail matter? This insight goes only so far. the Wired editor and co-chief. and what happens when you rely on the same mental model to solve everything. had two moments of genius: He visualized the demand for certain products as a ―power curve. exactly.‖ Anderson‘s book. the Long Tail attaches to your mind and gets stuck there. The tagline on the book‘s cover reads. improbably.‖ which is certainly wrong or at least exaggerated. and the content industries where it does. There aren’t Long Tails everywhere. Anderson‘s book exacerbates this problem. Like most good ideas. The Long Tail commits the sin of overreaching. What the book doesn‘t get at is the relationship between these standards-driven industries where the Long Tail doesn‘t matter.‖ At times.
Bias from stress-influence (introduction | posts) 26. Bias from liking/loving 17. Bias from disliking/hating 18. Conjunctive and disjunctive-events bias 11. regret avoidance. Commitment and Consistency Bias 19. Over-influence from authority 23. Do something tendency 32. Loss aversion? 24. Tendency to super-react to deprival. Not invented here bias — thinking that our own ideas are the best ones 38. underestimating situation factors (including roles) when explaining reasons. Bias from contrast 25. Do nothing tendency 33. Bias from self-interest — self deception and denial to reduce pain or increase pleasure. Over-influence from framing effects 43. Over-influence from precision/models 34. character 29. one to one versus one to many relationships 30.) 41. Bias from mis-reading people. strong reacting when something we have or almost have is (or threatens to be) taken away. Ideological bias 37. Simplicity Bias 35. (Man with a hammer. 15. Bias from physical or psychological pain 28.Asymmetric Information . Bias from emotional arousal 27. Bias from envy and jealousy 21. Bias from over-confidence 12. Lollapalooza Other Mental Models: .Biases emanating from the Confirmation Heuristic 8. Bias from anchoring 10. Uncertainty avoidance 36. Confirmation bias 9. Attribution Error. Tendency to solve problems using only the field we know best / favored ideas. Hindsight Bias Others 13. Bias from excessive fairness 20. Bias from the status quo 31. Bias from over-weighting the short-term 39. Reciprocation bias 22. Bias from association 16. Bias from incentives and reinforcement 14. Bias from social proof 42. Tendency to avoid extremes 40.
Process versus Outcome .Scientific Method .Mr.Moral Hazard .Basic Decision Making Process .Improving returns ..Gresham‘s Law .Scarcity .Utility .And then what? .Opportunity Cost .Brand .Complex adaptive systems .Decision trees .Margin of Safety .Ability to raise prices .Supply and Demand .Circle of competence Ecology .Scale .Diminishing Returns Investing .Distribution .Cost .Sunk Costs .The Red Queen Effect Business .Marginal Cost .Network Effect .Diminishing Utility .Game Theory .7 Deadly Sins .Systems Thinking Economics .Trade-offs . Market .Positive and Negative Externalities .Occam‘s Razor .Price Discrimination .Porters 5 forces .Comparative Advantage .The Agency Problem .Deduction and Induction .
Combinations .Evolution Sources: 1.Redundancy .Breakpoints Mathematics .Law of large numbers .Critical Mass .Trend .Tragedy of the Commons .Equilibrium Biology .Autocatalytic reactions Physics .Permutations .Variability .Prisoners‘ Dilemma .Bayes Theorem .Bottlenecks .Mean.Inversion Statistics .Quantum Mechanics .Thermodynamics . Median.Correlation versus Causation .Distribution Chemistry .Tight coupling .Newton‘s Laws .Momentum . Charlie Munger .Power Law .Time value of Money Engineering .Compounding .Kinetics .Feedback loops .Outliers and self fulfilling prophecy . Mode ..
2. SOURCE: http://www. 3. Some observations on mental models – appears in Mental Models (pp.com/mental-models/ .farnamstreetblog. The Cambridge Handbook of Thinking and Reasoning. 7-14).
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