9/7/2017 Mental Models: Learn How to Think Better and Gain a Mental Edge

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Mental Models: Learn How to Think

Better and Gain a Mental Edge

De nition: What Are Mental Models?

Let's start with a definition. What are mental models? A mental model is an
explanation of how something works. The phrase mental model is an
overarching term for any sort of concept, framework, or worldview that you
carry around in your mind.

Mental models help you understand life. For example, supply and demand is a
mental model that helps you understand how the economy works. Game theory
is a mental model that helps you understand how relationships and trust work.
Entropy is a mental model that helps you understand how disorder and decay
work.
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Mental models also guide your perception and behavior. They are the thinking
tools that you use to understand life, make decisions, and solve problems.
Learning a new mental model gives you a new way to see the worldlike
Richard Feynman learning a new math technique.

Mental models are imperfect, but useful. There is no single mental model from
physics or engineering, for example, that provides a flawless explanation of the
entire universe, but the best mental models from those disciplines have
allowed us to build bridges and roads, develop new technologies, and even
travel to outer space. As historian Yuval Noah Harari puts it, Scientists
generally agree that no theory is 100 percent correct. Thus, the real test of
knowledge is not truth, but utility.

The best mental models are the ideas with the most utility. They are broadly
useful in daily life. Understanding these concepts will help you make wiser
choices and take better actions. This is why developing a broad base of mental
models is critical for anyone interested in thinking clearly, rationally, and
effectively.

Mental Models Example

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9/7/2017 Mental Models: Learn How to Think Better and Gain a Mental Edge

How to Train Your Brain to Think in New Ways This article shares some
useful examples of how mental models work (and how the right mental model
can make a big difference).

The Big Mental Models

There are thousands of mental models, but the best ones apply broadly to life
and are useful in a wide range of situations.

Of all the mental models humankind has generated throughout history, there
are just a few dozen that you need to master to have a firm grasp of how the
world works. To quote Charlie Munger, 80 or 90 important models will carry
about 90% of the freight in making you a worldly-wise person. And, of those,
only a mere handful really carry very heavy freight.

After many hours of research, I have sorted through more than 1,000 mental
models and distilled them into a short list of the most important mental
models for daily life.

I am only included the most important and useful mental models on this page.
I have separated them out by industry below.

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9/7/2017 Mental Models: Learn How to Think Better and Gain a Mental Edge

Mental Models in Business

Economics

Common Knowledge

Comparative Advantage

Diversification

Economies of Scale

Efficient Market Hypothesis

Game Theory

Incentives (Reward and Punishment)

Scarcity

Supply and Demand

Psychology

Anchoring

Classical Conditioning (Pavlov)

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Commitment and Consistency Bias

Hyperbolic Discounting

Illusion of Control

Loss Aversion

Maslow's Hierarchy of Needs

Mere Exposure Effect

Operant Conditioning (Skinner)

Reciprocity

Status Quo Bias

Survivorship Bias

Tribalism

Thinking

The Scientific Method

Inversion

Surfing or Riding the Wave

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Working Backward

Mental Models in Science

Biology

Evolution by Natural Selection

Equilibrium (Homeostasis)

Heredity

Signalling

Chemistry

Activation Energy

Atomic Theory

Autocatalysis

Entropy (The Second Law of Thermodynamics)

Catalysts

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Physics

Critical Mass

Relativity

Velocity

Mental Models in Math and Engineering

Engineering

Break Points

Leverage

Margin of Safety

Redundancy

Mathematics

Normal Distribution (Bell Curve)

Permutations and Combinations

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Power Laws

Best Mental Models Books

Seeking Wisdom by Peter Bevelin

Poor Charlie's Almanack by Charles Munger

The Personal MBA by Josh Kaufman

The Fifth Discipline by Peter Senge

Want more? Browse my full list of the best business books.

All Mental Models Articles

This is a complete list of articles I have written on Mental Models. Enjoy!

Mental Models: How to Train Your Brain to Think in New Ways

Entropy: Why Life Always Seems to Get More Complicated

Inversion: The Crucial Thinking Skill Nobody Ever Taught You

A Margin of Safety: How to Thrive in the Age of Uncertainty

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All Models Are Wrong, Some Are Useful

How to Spot a Common Mental Error That Leads to Misguided Thinking

First Principles: Elon Musk on How to Think for Yourself

Or, browse my best articles.

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