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