Mental Models 101

Question 1

Where you really, truly know your stuff, your area of special competence.

Answer 1

Circle of Competence

Question 2

The map of reality is not reality. Even the best maps are imperfect. That’s because they are reductions of what they represent.

Answer 2

The Map is not the Territory

Question 3

A tool to help clarify complicated problems by separating the underlying ideas or facts from any assumptions based on them. What remains are the essentials.

Answer 3

First Principles Thinking

Question 4

Devices of the imagination used to investigate the nature of things. They help us learn from our mistakes and avoid future ones. They let us take on the impossible, evaluate the potential consequences of our actions, and re-examine history to make better decisions.

Answer 4

Thought Experiment

Question 5

Almost everyone can anticipate the immediate results of their actions. thinking farther ahead and thinking holistically. This instead requires us to not only consider our actions and their immediate consequences, but the subsequent effects of those actions as well.

Answer 5

Second-Order Thinking

Question 6

Trying to estimate, using some tools of math and logic, the likelihood of any specific outcome coming to pass.

Answer 6

Probabilistic Thinking

Question 7

Helps you identify and remove obstacles to success. As a thinking tool it means approaching a situation from the opposite end of the natural starting point. Most of us tend to think one way about a problem: forward. This allows us to flip the problem around and think backward.

Answer 7

Inversion

Question 8

Simpler explanations are more likely to be true than complicated ones. Instead of wasting your time trying to disprove complex scenarios, you can make decisions more confidently by basing them on the explanation that has the fewest moving parts.

Answer 8

Occam’s Razor

Question 9

We should not attribute to malice that which is more easily explained by stupidity. It demands that we ask if there is another reasonable explanation for the events that have occurred. The explanation most likely to be right is the one that contains the least amount of intent.

Answer 9

Hanlon’s Razor

Question 10

Though the human brain has trouble comprehending it, much of the world is composed of random, non-sequential, non-ordered events. We are “fooled” by random effects when we attribute causality to things that are actually outside of our control. If we don’t course-correct for this fooled-by-randomness effect – our faulty sense of pattern-seeking – we will tend to see things as being more predictable than they are and act accordingly.

Answer 10

Randomness

Question 11

The process by which we add interest to a fixed sum, which then earns interest on the previous sum and the newly added interest, and then earns interest on that amount, and so on ad infinitum. It is an exponential effect, rather than a linear, or additive, effect. Money is not the only thing that does this; ideas and relationships do as well.

Answer 11

Compounding

Question 12

In some systems, a failure in one area can negate great effort in all other areas. As simple multiplication would show, fixing the “zero” often has a much greater effect than does trying to enlarge the other areas.

Answer 12

Multiplying by Zero

Question 13

Insurance companies and subscription services are well aware of this concept – every year, a certain number of customers are lost and must be replaced. Standing still is the equivalent of losing, as seen in the model called the “Red Queen Effect.” This is present in many business and human systems: A constant figure is periodically lost and must be replaced before any new figures are added over the top.

Answer 13

Churn

Question 14

One of the fundamental underlying assumptions of probability is that as more instances of an event occur, the actual results will converge on the expected ones. For example, if I know that the average man is 5 feet 10 inches tall, I am far more likely to get an average of 5′10″ by selecting 500 men at random than 5 men at random. The opposite of this model is the law of small numbers, which states that small samples can and should be looked at with great skepticism.

Answer 14

Law of Large Numbers

Question 15

A statistical process that leads to the well-known graphical representation with a meaningful central “average” and increasingly rare standard deviations from that average when correctly sampled. (The so-called “central limit” theorem.) Well-known examples include human height and weight, but it’s just as important to note that many common processes, especially in non-tangible systems like social systems, do not follow this pattern.

Answer 15

ll Curve/Normal Distribution

Question 16

One of the most common processes that does not fit the normal distribution, whereby one quantity varies with another’s exponent rather than linearly. For example, the Richter scale describes the power of earthquakes on this kind of distribution scale: an 8 is 10x more destructive than a 7, and a 9 is 10x more destructive than an 8. The central limit theorem does not apply and there is thus no “average” earthquake. This is true of all distributions of this kind.

Answer 16

Power Laws