Cognitive structures that help individuals understand and interpret the world.

18 Mental Models #

What are the core mental models? #

Mental models are frameworks or cognitive structures that help individuals understand and interpret the world. They shape how we perceive reality, make decisions, and solve problems. While there are many mental models across different disciplines, certain core mental models have broad applicability and are particularly influential in shaping critical thinking. Here’s a breakdown of some of the most important ones:

1. The Map is Not the Territory #

• Definition: This model highlights the difference between reality and our perception or representation of it. The “map” is our interpretation or model of the world, while the “territory” is the actual world.

• Application: It serves as a reminder to question our assumptions and recognize that our understanding may be incomplete or biased. It encourages a healthy skepticism toward over-reliance on models and encourages flexibility in thinking.

2. Circle of Competence #

• Definition: This model revolves around understanding the boundaries of one’s knowledge and skills. Knowing what you know and what you don’t is crucial for effective decision-making.

• Application: It advises staying within your areas of expertise when making decisions and seeking advice or further education in areas outside your circle of competence.

3. Inversion #

• Definition: Inversion involves tackling problems by thinking about the opposite of what you want to achieve. Instead of asking, “How can I succeed?” you might ask, “How could I fail?” and then work to avoid those pitfalls.

• Application: This model is especially useful in problem-solving, risk management, and planning. By identifying and avoiding negative outcomes, one can more effectively pursue positive ones.

4. First Principles Thinking #

• Definition: This involves breaking down complex problems into their most fundamental components and reasoning from the ground up, rather than by analogy or convention.

• Application: It’s commonly used in innovation and problem-solving, allowing one to bypass assumptions and think creatively by rebuilding concepts from the most basic truths.

5. Occam’s Razor #

• Definition: This principle suggests that when presented with competing hypotheses or explanations, the one with the fewest assumptions should be selected.

• Application: It encourages simplicity and avoiding unnecessary complexity. This model is valuable in decision-making, scientific inquiry, and communication.

6. Opportunity Cost #

• Definition: Opportunity cost refers to the value of the best alternative that is foregone when a decision is made.

• Application: This economic principle is vital in decision-making, as it encourages considering not just the direct costs of actions but also the benefits of the alternatives that are sacrificed.

7. Compounding #

• Definition: Compounding refers to the exponential growth effect that occurs when earnings or benefits are reinvested or accumulated over time.

• Application: Widely recognized in finance, particularly in the context of interest and investment, but also applicable in knowledge acquisition, where small, consistent improvements lead to significant long-term gains.

8. Probabilistic Thinking #

• Definition: This involves understanding and incorporating probabilities into decision-making, rather than thinking in absolutes.

• Application: Essential in risk management, gambling, investing, and any field where uncertainty plays a significant role, it encourages a nuanced view of outcomes and encourages better forecasting and planning.

9. Second-Order Thinking #

• Definition: This model involves considering not just the immediate consequences of an action but also the subsequent effects that might follow.

• Application: It’s crucial in strategic thinking and long-term planning, helping to anticipate ripple effects and avoid unintended consequences.

10. Confirmation Bias #

• Definition: This model refers to the tendency to seek out, interpret, and remember information that confirms one’s preconceptions, while ignoring information that challenges them.

• Application: Recognizing confirmation bias is key in critical thinking, research, and decision-making, helping to ensure a more objective evaluation of evidence.

11. The Lindy Effect #

• Definition: The Lindy Effect suggests that the future life expectancy of non-perishable things (ideas, technologies, etc.) is proportional to their current age. The longer something has survived, the longer it is likely to continue to survive.

• Application: Useful in evaluating the durability and potential longevity of ideas, customs, technologies, and more, helping to differentiate between fads and lasting innovations.

12. Survivorship Bias #

• Definition: This model describes the error of focusing on successful entities (or survivors) while overlooking those that failed and are thus no longer visible.

• Application: It’s important in research, business analysis, and history, where focusing solely on the successes can lead to incorrect conclusions or overestimating the likelihood of success.

13. Bayesian Updating #

• Definition: Bayesian updating is a method of adjusting beliefs or predictions based on new evidence, applying the principles of Bayesian probability.

• Application: Essential in fields that require continuous learning and adaptation, such as machine learning, medicine, and scientific research, it allows for more accurate and dynamic decision-making.

14. The Pareto Principle #

• Definition: The Pareto Principle suggests that roughly 80% of effects come from 20% of the causes.

• Application: Widely used in business, productivity, and economics, this principle helps prioritize efforts and resources by identifying the most impactful factors.

15. Loss Aversion #

• Definition: This concept from behavioral economics describes the tendency for people to prefer avoiding losses over acquiring equivalent gains.

• Application: Understanding loss aversion is crucial in marketing, investing, and decision-making, helping to predict behavior and tailor strategies accordingly.

16. Feedback Loops #

• Definition: Feedback loops describe the process by which a system’s output is fed back into the system as input, often leading to a cycle of reinforcement or dampening.

• Application: Recognizing feedback loops is vital in understanding complex systems, whether in biology, economics, or technology, as they can lead to exponential growth, stabilization, or collapse.

17. Cognitive Load Theory #

• Definition: This theory suggests that our working memory has a limited capacity, and overloading it can impair learning and decision-making.

• Application: Important in education, user experience design, and productivity, it underscores the importance of simplifying information and focusing on one task at a time to optimize cognitive efficiency.

18. Sunk Cost Fallacy #

• Definition: The sunk cost fallacy refers to the irrational behavior of continuing an endeavor solely because of previously invested resources (time, money, effort) that cannot be recovered.

• Application: Recognizing this fallacy is crucial in decision-making, helping to avoid throwing good money (or time) after bad and making more rational choices based on future benefits rather than past losses.

These core mental models provide a foundation for thinking clearly and effectively across a wide range of contexts. Mastering them can significantly enhance one’s ability to navigate complex situations, make better decisions, and ultimately, lead a more informed and successful life.

Please create a table ranking these models per 1) efficiency, 2) rarity (how often people apply them) and 3) errors (how often they are applied in the wrong context). Also, create a lead column with a sequence number. #