Mental Models

By | Mental Models

We don’t see reality as it is. 
We form perceptions about how the world works.
Like a map that tries to represent territories.
Being cognitive misers, we rely on heuristics, making shortcuts in our thinking process.
These imperfect shortcuts cause systematic errors known as biases that sabotage the quality of our decisions.

“Your personal experiences make up maybe 0.00000001% of what’s happened in the world but maybe 80% of how you think the world works… We’re all biased to our own personal history.”

Morgan Housel

But it isn’t easy to be aware of our biases. They influence our decision-making and shape our behaviour constantly without us knowing.

The first principle is that you must not fool yourself – and you are the easiest person to fool.

Richard Feynman

Mental models are useful to improve the way we interpret the world and help us make better decisions, and in turn achieve better outcomes in our lives.

Truth seeking is a process. Getting closer to the truth is the goal.

My most fundamental principle: Truth —more precisely, an accurate understanding of reality— is the essential foundation for producing good outcomes.

Ray Dalio

Today’s society rewards specialists and that caused us to be tunnel-visioned about the world. Mental models should be multi-disciplinary and it becomes exceptionally useful when the disciplines cross pollinate or reach a point of consilience.

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. You may say, ‘My God, this is already getting way too tough.’ But, fortunately, 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. And, of those, only a mere handful really carry very heavy freight.

Charlie Munger

Inversion – “Invert, always invert,” Carl Jacobi said. Don’t just think forward, but also think backward. We follow the herd by default, even in the way we think. To think differently is unnatural and requires cognitive effort. Sometimes a new perspective dramatically emerged by inverting our thinking. But it doesn’t mean we should always be contrarian for the sake of being contrarian.

Via Negativa – This term was originally used in Christian theology to describe what God isn’t in order to understand what God is. But it soon evolved to beyond theology and became nothing about religion. I was introduced to this term when Nassim Taleb used it in his book which opened me up to this ‘removing the bad’ mental model. Once this worldview was activated, I started to realise many others from Warren Buffett to Bruce Lee have been emphasising it all along.

Focus

Randomness – This worldview is heavily influenced by Nassim Taleb. A lot of our successes are due to luck but we keep attributing them to our skills and abilities. We are all similar to optimistic gamblers making bets in our lives and believing we will win.

Pareto Principle

Fermi Estimate

Entropy

Diminishing Marginal Returns

Leave a Reply

Your email address will not be published.