Firstly, I owe significant credit to the great investor Charlie Munger. For years, Mr Munger has been promoting 'mental models' and the multidisciplinary method for solving problems. He is the most underrated genius of our time. Through his ideas, I have created my own list of mental models that I apply to my life. Check out the legendary book, Poor Charlie’s Almanack.

What is a mental model?

It is the big ideas / concepts / principles from all the major academic disciplines. The mental model system is designed to use the most powerful concepts from every field to gain significant insights. Similar to lateral thinking, instead of attacking a situation from one angle, you attack it from ALL angles.

In essence, mental models are tools for thinking. 

 

The image below is a great visual analogy. Each piece represents a mental model all coming together to create a greater understanding of the situation.  

 
 [Image credit:  http://www.facets.la/ ] 

[Image credit: http://www.facets.la/

 

How To Use Mental Models?

Run through each model as a checklist. Ideally, the right model will trigger in our mind at the right time. However, memory is fallible. Simply, there are too many models and we’re not going to remember them all. If we run through the models like a checklist, it will trigger our memories and we’ll be able to make the appropriate connections.

Mental models can create insights via two main ways:

1) Interaction

Our existence is governed by many academic fields that interact with each other. Every day, our lives are determined by physics, biology, chemistry, psychology, engineering, economics, law, etc. Understanding how they interact within our particular situation can lead to some important findings.

For example, see my in-depth articles on physical attractiveness and the anchoring bias.

2) Transferable Pattern

Academic fields often identify patterns that are applicable to other fields. Sometimes, a pattern is so powerful that it is applied to just about everything. For example: The aeronautical engineering model of ‘margin of safety’.

Consider a plane that needs a part to be replaced every 1,000 km. It would be risky to replace it at 999 km as all variables cannot be known. There may have been a particularly rough patch with excessive turbulence that added strain to that part. It is safer to replace it at 800 km. This leaves 200 km 'margin of safety'.* This same model appears in many other disciplines: software, accounting, investing, pharmaceutical drugs, road planning, legal regulation, medical instruments, evolution, risk management, paediatric cardiology, urology, food safety, etc, etc. 

* I give credit for this example to Farnam St

Top-Down vs Bottom-Up Thinking

A major strength of the mental model method is that it naturally uses bottom-up thinking. Let me explain. Top-down thinking starts with a model and then proceeds to squeeze and stretch reality so that it will align with our current agenda. The bottom-up thinking starts with reality, then proceeds to align the models that fit the best. We can quickly imagine how to the top-down approach is riddled with desperation and biases. As the great Sherlock Holmes says: 

It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit the facts.**

**Adventures of Sherlock Holmes by Sir Arthur Conan Doyle, pg 7

What Am I Doing?

I am finding, learning, filtering, and deciphering which models are useful. My primary sources are from books, textbooks, and academic journals. Next, I turn the mental models into usable form and post them to this website.

 

 
 

A CHECKLIST OF 107 MENTAL MODELS

Psychology

cognitive biases & Heuristics 


  • Anchoring Bias

This psychological phenomenon ‘occurs when people consider a particular value for an unknown quantity before estimating that quantity.’ ‘The estimates stay close to the number that people considered—hence the image of an anchor.’ 

Thinking Fast and Slow by Daniel Khaneman


  • Availability Heuristic

'People assess the frequency of a class or the probability of an event by the ease which instances or occurrences can be brought to mind.' 'For example, one may assess the risk of heart attack among middle-aged people by recalling such occurrences among one's acquaintances. Similarly, one may evaluate the probability that a given business venture will fail by imagining various difficulties it could encounter.'

Journal Article: Judgment Under Uncertainty: Heuristics and Biases (1974) by Amos Tversky & Daniel Kahneman


  • Bias from Liking

People are persuaded more by people they like. Eg. People are more likely to buy products from sales people they like.

Influence: The Psychology is Persuasion by Robert Cialdini


  • Cognitive Dissonance & Self Justification

Psychological discomfort experienced when confronted with conflicting ideas, beliefs, values & information. We seek to reduce this discomfort through self-justification. This can lead to cognitive biases. Self-justification: reasoning that supports one’s own behaviour and rejects negative feedback. Read more.

Mistakes Were Made (But Not By Me) by Carrol Travis & Elliot Aronson


  • Confirmation Bias

Searching for evidence that supports one’s pre-existing viewpoint while ignoring disconfirming evidence. Read more.

Mistakes Were Made (But Not By Me) by Carrol Travis & Elliot Aronson


  • Gambler's Fallacy

'The mistaken belief that, if something happens more frequently than normal during some period, it will happen less frequently in the future, or that, if something happens less frequently than normal during some period, it will happen more frequently in the future (presumably as a means of balancing nature). In situations where what is being observed is truly random, this belief, though appealing to the human mind, is false.' Example: If a coin is flipped and it lands on heads six times in a row, You would probably feel like it will land on tails this time. However, the probability is always 50%.

Wiki


  • Green Lumber Fallacy

Focusing on the wrong information. '...real causative factors of success are often hidden from us. We seduce ourselves into overestimating the impact of our intellectualism and then wonder why “idiots” are getting ahead.' 

Farnam Street Blog


  • Physical Attractiveness Bias

Read more.


  • Planning Fallacy

'...planners [tend to] rely on their best-case plans for a current project even though similar tasks in the past have typically run late.' Example: 'According to original estimates in 1957, the Sydney Opera House would be completed in early 1963 for $7 million.' '... it finally opened in 1973 for a cost of $102 million.'

The Psychology of Intuitive Judgment By Thomas Gilovich, Dale Griffin, Daniel Kahneman


  • Representativeness Heuristic

'...in which probabilities are evaluated by the degree to which A is representative of B, that is, by the degree to which A resembles B. For example, when A is highly representative of B, the probability that A originates from B, is judged to be high. On the other hand, if A is not similar to B, the probability that A originates from B is judged to be low.' '...leads to serious errors, because similarity, or representativeness, is not influenced by several factors that should affect judgments of probability.' Such as not considering prior probabilities; not considering sample size; 

Journal Article: Judgment Under Uncertainty: Heuristics and Biases (1974) by Amos Tversky & Daniel Kahneman


  • Should'ing at the Universe

Ignoring the way the universe is, based on how it should be. Example: “I don’t need to dress well, because people should not judge me based on the way I dress.” However, people do judge other people based on the way they dress, regardless of their own morals.

Source


  • Vocalisation Bias

The tendency for people to commit to what they say, even when they're wrong, in order to avoid public shame. This bias is most apparent during public debates. Ironically, persisting when clearly wrong, can backfire and worsen the person's reputation.  

Charlie Munger


Memory


  • False Memories

A memory that is recalled but did not happen in real life. Memories can be altered by outside influences. Examples: there are a series of law cases where psychologists induced false memories in patients; children giving false abuse testimonies due to the pressure in questioning. Read more.

Mistakes Were Made but Not By Me - Carrol Travis & Aronson


Behaviouralism 


  • Operant Conditioning

People will repeat what worked for them the last time.

Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger edited by Peter D Kaufman


  • Pavlovian Conditioning 

The change of behaviour due to the unconscious pairing of stimuli.

Associative Learning and Conditioning Theory: Human and Non-Human Applications by Todd R Schachtman, PhD, Steve S Reilly


Evolutionary psychology


  • Domain Specificity

“...our reactions, our mode of thinking, our intuitions, depend on the context in which the matter is presented.” Example: A study shows that statisticians get simple questions wrong when phrased in a non-statistical manner.

The Black Swan by Nassim Nicholas Taleb


Social cognition


  • Theory of Mind

As we cannot read the minds of others, hypotheses have to be made. People with underdeveloped ‘theory of mind’, lack in accuracy in predicting others thoughts, feelings, mental states, beliefs, wishes, desires and reasons for actions. Read more.


Psychological Disorders


  • Distress Tolerance

Some psychiatrists believe that the lack of distress tolerance, that is the ability to tolerate thoughts, urges, and internal sensations, is at the heart of most mental disorders. 

Distress Tolerance: Theory, Research, and Clinical Applications by  by Michael J. Zvolensky, Amit Bernstein, Anka A. Vujanovic


General


  • Appeal to Self-Interest

People don't care what you have to say if it doesn’t benefit them. Example. (Charlie Munger is referring to a potential client) “And if you see he wants to do something really stupid, it probably won't work to tell him, "What you're doing is bad. I have better morals than you." That offends him. You're young. He's old. Therefore, instead of being persuaded, he's more likely to react with, "Who in the hell are you to establish the moral code of the whole world?" But, instead, you can say to him, "You can't do that without three other people beneath you knowing about it. Therefore, you're making yourself subject to blackmail. You're risking your reputation. You're risking your family, your money, etc."

Poor Charlie's Almanack


  • Delayed Gratification

'The ability to resist the temptation for an immediate reward and wait for a later reward. Generally, delayed gratification is associated with resisting a smaller but more immediate reward in order to receive a larger or more enduring reward later. A growing body of literature has linked the ability to delay gratification to a host of other positive outcomes, including academic success, physical health, psychological health, and social competence.'

Wiki


  • Learned Helplessness

'The organism learned that it is helpless in situations where there is a presence of aversive stimuli and has accepted that it has lost control, and thus gives up trying.'

Wiki


  • Scapegoating

Is transferring the blame of a personal inadequacy onto another person or object. Marketers use this theory when selling products to break through the first barrier, as no one wants to feel as if they are the problem. Example: 'The first commercial, for an antidepressant medication, starts out with something like, “Feeling depressed lately? It may be the result of a chemical imbalance in your brain.” The second commercial, one for a weight loss product, starts out like this, “If you’ve tried to lose that extra weight and have failed, it may not be your fault. It may be your metabolism.” Can you see their use of the scapegoat principle? If you’re depressed, it may not be your fault. It might simply be a biological factor beyond your control. And if you’re overweight and have failed to slim down, it might not be your fault, but simply a problem with your metabolism!' 

The One Sentence Persuasion Course: 27 Words to Make the World do Your Bidding by Blair Warren


  • Self-Fulling Prophecy

Example: “...if A expects B to be angry, defensive person, and A therefore acts in angry defensive ways in order to ward off the expected attacks of B, B may be provoked into the angry behaviour which so serves to confirm A’s initial perception.” 

Conflict Management: A Practical Guide, 5th Ed by Peter Condliffe


  • Yerkes-Dodson Law

'Performance increases with physiological or mental arousal, but only up to a point. When levels of arousal become too high, performance decreases.' Note: performance does not decrease with simple tasks. See image.

Wiki


Law

  • Burden of Proof

'The necessity of proof always lies with the person who lays charges.'

Wiki


  • Balance of Probabilities

Who is more believable?


  • Micro-Strategies

'Small advantages increase the probability of winning. A lot of small advantages increase the probability even further.'

The Tools of Argument: How the Best Lawyers Think, Argue and Win by Joel Trachtman [29]


Philosophy

logical fallacies - formal


  • Affirming the Consequent

A to B, does not equal, B to A. 

'An “if-then” statement has an antecedent (if) and a consequent (then). If the if-then statement is true, every time there is an antecedent, there will be a consequent. But it will not necessarily be true that every time there is a consequent there is also an antecedent— other causes might result in the consequent. 

Example: i. If she is a lawyer, then she is expert in the law. ii. She is expert in the law. iii. Therefore, she is a lawyer.

You can readily see that expertise in law does not necessarily constitute someone a lawyer. Many politicians, journalists, judges, and scholars become experts in the law without becoming lawyers.'

The Tools of Argument: How the Best Lawyers Think, Argue, and Win by Joel Trachtman [145]


  • Anecdotal Fallacy

Using personal experience or isolated example as conclusive.


  • Appeal to Possibility

When a conclusion is assumed to be true, only when there is a possibility. Something that is possible, is possible, it not true with 100% certainty. Read more.

Logically Fallacious: The Ultimate Collection of Over 300 Logical Fallacies by Bo Bennet


  • Conjunction Fallacy

The assumption that conjoined  circumstance is more probable than a single. Single is always more probable that multiple. Read more.

Judgment Under Uncertainty: Heuristics and Biases By Daniel Kahneman, Paul Slovic, Amos Tversky


  • Fallacy Fallacy

Making the assumption that the conclusion is wrong because the argument is wrong. A wrong argument can still have a correct conclusion. Read more.

Thinking from A to Z, By Nigel Warburton


  • The Fallacy of Negative Premises

Is committed when one arrives at a positive conclusion, with a negative premise. Read More.

False Persuasion, Superficial Heuristics, and the Power of Logical Form to Test the Integrity of Legal Argument by Stephen M. Rice


Logical fallacies - informal


  • Ad Hominem

 

'An inappropriate ad hominem attack occurs when the nature of the criticism of the speaker has nothing to do with the truth of the information provided by the speaker. For example, if the speaker is a visual witness to a murder that took place some distance away, it is generally appropriate, if true, to claim that the speaker is nearsighted and was not wearing corrective lenses at the time. But it is an inappropriate ad hominem attack to point out that the speaker is a pacifist or a politician.

The Tools of Argument: How the Best Lawyers Think, Argue, and Win by Joel Trachtman [143,144]


  • Bifurcation Fallacy

"...(either-or, black or white, all or nothing fallacy) assumes that two categories are mutually exclusive and exhaustive, that is, something is either a member of one or the other, but not both or some third category.(either-or, black or white, all or nothing fallacy) assumes that two categories are mutually exclusive and exhaustive, that is, something is either a member of one or the other, but not both or some third category." Source.


  • False Precision

“False precision occurs when an one treats information as being more precise than it really is. It is characterized by conclusions that are based on imprecise information that must be taken as precise in order to adequately support the conclusion.”

Criminal Profiling: An Introduction to Behavioral Evidence Analysis By Brent E. Turvey


Philosophical Tools


  • (Anti)List

A list that contains actions and thoughts that are incorrect for the purpose of minimising disasters. These include: wrongs; myths; errors; other’s mistakes; things to avoid; fallacies; and misconceptions. Read more.


  • Abductive Reasoning

Contrast this will 'inductive' and 'deductive' reasoning.

'Abduction is a process of reasoning used to decide which explanation of given phenomena we should select, and so, naturally, it is also called ‘argument to the best explanation’.' The principles are 'Simplicity', 'Coherence', 'Testability or Predictive Power' and 'Comprehensiveness in Scope'. Read more.

The Philosopher's Toolkit by Peter S. Fosl and Julian Baggini


  • Cause-and-Effect Relationships

'When an event occurs as a direct result of a previous event, a cause-and-effect relationship exists. For example, lightning and thunder are correlated and have a cause-and-effect relationship. Lightning causes thunder.' 'Many events are correlated, but not all correlations show cause-and-effect.' 'Knowing that a cause-and-effect relationship exists enables us to make a prediction. If the same set of circumstances occurs in the future, the same effect will result.'

Concepts in Biology, 14th Ed by Eldon D. Enger, Frederick C. Ross, David B. Vailey


  • Conflation

'Conflation happens when the identities of two or more individuals, concepts, or places, sharing some characteristics of one another, seem to be a single identity, and the differences appear to become lost.' Wiki.


  • Counterfactual Test

'One way to test claims of explanatory relevance is by applying the counterfactual test: to say that a's being F is explanatorily relevant to b's being G is to say that if a had not been F then b would not have been G (e.g. the striking of the match explains the occurrence of the explosion because if the match had not been struck the explosion would not have occurred).

An Introduction to Contemporary Metaethics by Alexander Miller


  • Hanlon's Razor

'Never attribute to malice that which is adequately explained by stupidity' or 'Don't assume bad intentions over neglect and misunderstanding.'

Wiki


  • The Lucretius Problem

'...risk management professionals look in the past for information on the so-called worst-case scenario and use it to estimate future risks—this method is called “stress testing.” They take the worst historical recession, the worst war, the worst historical move in interest rates, or the worst point in unemployment as an exact estimate for the worst future outcome. But they never notice the following inconsistency: this so-called worst-case event, when it happened, exceeded the worst case at the time.

I have called this mental defect the Lucretius problem, after the Latin poetic philosopher who wrote that the fool believes that the tallest mountain in the world will be equal to the tallest one he has observed. 

The same can be seen in the Fukushima nuclear reactor, which experienced a catastrophic failure in 2011 when a tsunami struck. It had been built to withstand the worst past historical earthquake, with the builders not imagining much worse—and not thinking that the worst past event had to be a surprise, as it had no precedent. Likewise, the former chairman of the Federal Reserve, Fragilista Doctor Alan Greenspan, in his apology to Congress offered the classic “It never happened before.”'

Antifragile by Nassim Nicholas Taleb


  • Mithridatization  

'...the result of an exposure to a small dose of a substance that, over time, makes one immune to additional, larger quantities of it. It is the sort of approach used in vaccination and allergy medicine.'

Antifragile by Nassim Nicholas Taleb


  • Occam's Razor

'Don’t concoct a complicated, extravagant theory if you’ve got a simpler one (containing fewer ingredients, fewer entities) that handles the phenomenon just as well.' Example: 'If exposure to extremely cold air can account for all the symptoms of frostbite, don’t postulate unobserved 'snow germs' or 'arctic microbes.''

Intuition Pumps and Other Tools for Thinking by Daniel Dennett [38] 


  • Paradigm Shift

Scientists may develop a pattern of thinking about their field, known as a paradigm. Some paradigms may be successful at first but then become less so. When that happens, a new paradigm may be needed or, as is sometimes said, a paradigm shift occurs. 

General Chemistry: Principles and Modern Applications, 10th Ed, by Petrucci, Herring, Madura, Bissonnette [3]


  • Reductio Ad Absurdum

'This ploy points out the consequences of generalization of an opponent’s position. In this sense, reductio ad absurdam is based on an assumption of consistent treatment of like cases. For example, suppose that your opponent argues that it is obvious that people should not fly because they were not born with wings. You can point out in response that perhaps people also should not ride on bicycles or in cars, because they were not born with wheels. The generalized proposition is that people should not use modes of transport unless they were born with the relevant equipment. You are simply pointing out that the generalized proposition encompasses more than the speaker probably intended, and more than could possibly make sense.' Reductio Ad Absurdum only becomes fallacious when one misrepresents the opposition's argument. 

 


  • Scientific Method

'The scientific method is the combination of observation, experimentation, and the formulation of laws, hypotheses, and theories.'

When enough observations have been made so that a pattern begins to emerge, a generalization or natural law can be formulated describing the phenomenon. Natural laws are concise statements, often in mathematical form, about natural phenomena. The form of reasoning in which a general statement or natural law is inferred from a set of observations is called induction. The success of a natural law depends on its ability to explain, or account for, observations and to predict new phenomena.  We should not think of a natural law as an absolute truth, however. 

'A hypothesis is a tentative explanation of a natural law. If a hypothesis survives testing by experiments, it is often referred to as a theory.'

'A theory is a model or way of looking at nature that can be used to explain natural laws and make further predictions about natural phenomena. When differing or conflicting theories are proposed, the one that is most successful in its predictions is generally chosen. Also, the theory that involves the smallest number of assumptions the simplest theory is preferred.'

General Chemistry: Principles and Modern Applications, 10th Ed, by Petrucci, Herring, Madura, Bissonnette [2,3]


  • Reductionism

'...a whole can be understood completely if you understand its parts, and the nature of their ‘sum.'

Complexity: A Guided Tour by Melanie Mitchell


  • Serendipity

'Another factor in scientific discovery is chance, or serendipity. Many discoveries have been made by accident. For example, in 1839, the American inventor Charles Goodyear was searching for a treatment for natural rubber that would make it less brittle when cold and less tacky when warm. In the course of this work, he accidentally spilled a rubber sulfur mixture on a hot stove and found that the resulting product had exactly the properties he was seeking. Other chance discoveries include X-rays, radioactivity, and penicillin. So scientists and inventors always need to be alert to unexpected observations. Perhaps no one was more aware of this than Louis Pasteur, who wrote, 'Chance favors the prepared mind.''

General Chemistry: Principles and Modern Applications, 10th Ed, by Petrucci, Herring, Madura, Bissonnette [3]


  • Silent Evidence

It is fallacious to focus on evidence that is clearly visible while ignoring disconfirming evidence that is not readily seen. Read more.

Black Swan by Nassim Nicholas Taleb


  • Trial & Error

'Further, the random element in trial and error is not quite random, if it is carried out rationally, using error as a source of information. If every trial provides you with information about what does not work, you start zooming in on a solution—so every attempt becomes more valuable, more like an expense than an error. And of course you make discoveries along the way.'

Antifragile by Nassim Nicholas Taleb


  • Undercompensation and Overcompensation

 

'It is said that the best horses lose when they compete with slower ones, and win against better rivals. Undercompensation from the absence of a stressor, inverse hormesis, absence of challenge, degrades the best of the best. In Baudelaire’s poem, “The albatross’s giant wings prevent him from walking”—many do better in Calculus 103 than Calculus 101.

This mechanism of overcompensation hides in the most unlikely places. If tired after an intercontinental flight, go to the gym for some exertion instead of resting. Also, it is a well-known trick that if you need something urgently done, give the task to the busiest (or second busiest) person in the office. Most humans manage to squander their free time, as free time makes them dysfunctional, lazy, and unmotivated—the busier they get, the more active they are at other tasks.'

Antifragile by Nassim Nicholas Taleb


Economics

  • Absolute Advantage

The producer that requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good.' Example: 'Rose has an absolute advantage both in producing meat and in producing potatoes because she requires less time than Frank to produce a unit of either good. Rose needs to input only 20 minutes to produce an ounce of meat, whereas Frank needs 60 minutes. Similarly, Rose needs only 10 minutes to produce an ounce of potatoes, whereas Frank needs 15 minutes. Based on this information, we can conclude that Rose has the lower cost of producing potatoes, if we measure cost in terms of the quantity of inputs.'

Principles of Economics 7th Ed by N. Gregory Mankiw [52]


  • Comparative Advantage

Person A has an advantage over person B in production, and person B has an advantage over person A. When both parties trade with each other, they both benefit.  “When each person specializes in producing the good for which he or she has a comparative advantage, total production in the economy rises. This increase in the size of the economic pie can be used to make everyone better off.”

Principles of Economics 7th Ed by N. Gregory Mankiw [53]


  • Diminishing Marginal Product

'The property whereby the marginal product of an input declines as the quantity of the input increases.' Example: In cookie production business, 'at first, when only a few workers are hired, they have easy access to kitchen equipment. As the number of workers increases, additional workers have to share equipment and work in more crowded conditions. Eventually, the kitchen is so crowded that the workers start getting in each other’s way. Hence, as more workers are hired, each additional worker contributes fewer additional cookies to total production.'

Principles of Economics 7th Ed by N. Gregory Mankiw [265]


  • Elasticity

'Elasticity is a measure of how much buyers and sellers respond to changes in market conditions.' Example: 'Many studies have examined consumers’ response to gasoline prices, and they typically find that the quantity demanded responds more in the long run than it does in the short run. A 10 percent increase in gasoline prices reduces gasoline consumption by about 2.5 percent after a year and about 6 percent after five years. About half of the long-run reduction in quantity demanded arises because people drive less, and half arises because they switch to more fuel-efficient cars.'

Principles of Economics 7th Ed by N. Gregory Mankiw [90]


  • Externalities

'An externality arises when a person engages in an activity that influences the well-being of a bystander but neither pays nor receives compensation for that effect.' It can be positive or negative. Examples: Negative - 'Firms that make and sell paper also create, as a by-product of the manufacturing process, a chemical called dioxin. Scientists believe that once dioxin enters the environment, it raises the population’s risk of cancer, birth defects, and other health problems.' Positive - 'Research into new technologies provides a positive externality because it creates knowledge that other people can use.' 

Principles of Economics 7th Ed by N. Gregory Mankiw [195,196]


  • Incentive

“Something that induces a person to act. Because rational people make decisions by comparing costs and benefits, they respond to incentives.”

Principles of Economics 7th Ed by N. Gregory Mankiw [7]


  • Marginal Change

'A small incremental adjustment to an existing plan of action. Keep in mind that margin means “edge,” so marginal changes are adjustments around the edges of what you are doing.' Examples: 'At dinnertime, the question you face is not “Should I fast or eat like a pig?” More likely, you will be asking yourself “Should I take that extra spoonful of mashed potatoes?” When exams roll around, your decision is not between blowing them off and studying twenty-four hours a day but whether to spend an extra hour reviewing your notes instead of watching TV.'

Principles of Economics 7th Ed by N. Gregory Mankiw [6]  


  • Opportunity Cost

“Whatever must be given up to obtain some item.” 

Principles of Economics 7th Ed by N. Gregory Mankiw


  • Production Function

'The relationship between quantity of inputs used to make a good and the quantity of output of that good.' 

Principles of Economics 7th Ed by N. Gregory Mankiw [263]


  • Supply & Demand

“Law of demand: the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises.” 

“Law of supply: the claim that, other things being equal, the quantity supplied of a good rises when the price of the good rises.”

Principles of Economics 7th Ed by N. Gregory Mankiw [67,73]


  • Trade-off

'To get something that we like, we usually have to give up something else that we also like.' 

Principles of Economics 7th Ed by N. Gregory Mankiw [4]


  • Tragedy of the Commons

'An economic problem in which every individual tries to reap the greatest benefit from a given resource. As the demand for the resource overwhelms the supply, every individual who consumes an additional unit directly harms others who can no longer enjoy the benefits.'

Investopedia


  • Transactional Costs

'The costs that parties incur in the process of agreeing to and following through on a bargain.' If the transactional costs are too high, a person may not follow through with the plan. Examples: 'Imagine that Dick and Jane speak different languages so that, to reach an agreement, they need to hire a translator.' The cost 'of lawyers required to draft and enforce contracts.'

Principles of Economics 7th Ed by N. Gregory Mankiw [211]


  • Wealth Effect

“A lower price level raises the real value of households’ money holdings, which stimulates consumer spending.” 

Principles of Economics 7th Ed by N. Gregory Mankiw


Biology

  • Red Queen Effect

Where one species gain an advantage, the other species adapt to keep up. Both species are continually progressing with no long term advantage over the other. Read more.

Deep Simplicity: Bringing Order to Chaos and Complexity by John Gribbin


  • Batesian Mimicry

'A form of biological resemblance in which a noxious, or dangerous, organism (the model), equipped with a warning system, is mimicked by a harmless organism (the mimic). The mimic gains protection because predators mistake it for the model and leave it alone.'

Read a great article by Farnam Street.

Britannica  


  • Association

'An animal learns that a particular outcome is connected with a particular stimulus.' For example, 'many mammalian predators associate prey with highpitched, squealing sounds.' 'Association is extremely common in humans. We associate smells with certain kinds of food, sirens with emergency vehicles, and words with their meanings.'

Concepts in Biology, 14th Ed by Eldon D. Enger, Frederick C. Ross, David B. Bailey


  • Habituation

'Habituation is a common human experience. We readily ignore sounds that are continuous, such as the sound of air conditioning equipment or the background music in shopping malls. Teachers recognize that it is important to change activities regularly to keep their students’ attention.'

Concepts in Biology, 14th Ed by Eldon D. Enger, Frederick C. Ross, David B. Bailey


  • Responsive Processes

 'Allow organisms to react to changes in their surroundings in a meaningful way.'

'Irritability is an individual’s ability to recognize that something in its surroundings has changed (a stimulus) and respond rapidly to it, such as your response to a loud noise, beautiful sunset, or bad smell.'

'Individual adaptation also results from an organism’s reaction to a stimulus, but it is slower than an irritability response, because it requires growth or some other fundamental change in an organism. For example, during the summer the varying hare has brown fur. However, the shortening days of autumn cause the genes responsible for the production of brown pigment to be “turned off” and new, white hair grows.'

Concepts in Biology, 14th Ed by Eldon D. Enger, Frederick C. Ross, David B. Bailey


  • Emergent Properties

'Never-before-seen features that result from the interaction of simple components when they form much more complex substances.' 'For example, when atoms on the first level interact to form molecules on the second level, new properties emerge that are displayed by the molecules (e.g., the ability to serve as genetic material). In turn, these molecules work together to form the parts of the next higher level, cells. Again, cells have a whole new set of emergent properties—all of life’s characteristics. Continuing on, cells become organized into tissues; tissues into organs; organs into organ systems; and organ systems into organisms. All of these levels of organization exist within you as an individual. These levels continue to provide you with a biological context for the world around you. Organisms are grouped into populations on the basis of where they live. Several populations are defined as a community. Now, the levels of organization start to include nonliving environmental characteristics, too. Communities and their environment form ecosystems. Several ecosystems form biomes and, finally, several biomes form the biosphere of our planet.'

Concepts in Biology, 14th Ed by Eldon D. Enger, Frederick C. Ross, David B. Bailey


  • Biotic Potential

'The theoretical number of offspring that could be produced.'

Strategy 1: 'Produce huge numbers of offspring but not provide any support for them.' Example: 'An apple tree with thousands of flowers may produce only a few apples because the pollen that contains the sperm cells was not transferred to the female part of each flower in the process of pollination.' Limitation: 'Even after offspring are produced, mortality is usually high among the young. Most seeds that fall to the Earth do not grow, and most young animals die. Usually, however, enough survive to ensure the continuance of the species.'

Strategy 2: 'Produce relatively fewer individuals but provide care and protection, which ensures a higher probability that the young will become reproductive adults. Example: 'Humans generally produce a single offspring per pregnancy, but nearly all of them live.' Strength: 'Even though fewer young are produced by animals such as birds and mammals, their reproductive capacity still greatly exceeds the number required to replace the parents when they die.'

Concepts in Biology, 14th Ed by Eldon D. Enger, Frederick C. Ross, David B. Bailey


Sociology

Social Groups


  • Deindividuation

A group of people that are in a psychological state where each individual stops thinking of themselves as individuals. This usually results in extreme mob-like violent behaviour. They behave in ways that they would not normally do. 

Social Groups in Action and Interaction by Charles Stangor


  • Optimal Distinctiveness

The personal tension between ‘fitting in’ and maintaining personal identity.

Social Groups in Action and Interaction by Charles Stangor


  • Self-Categorization Theory

When interacting with others, we sometimes act as individuals and sometimes act as members of a social group. 

Social Groups in Action and Interaction by Charles Stangor


  • Social Exchange

The rewards & costs of being in a group. Rewards: attention, praise, affection, love. Costs: disagreements between people, guilt from perceived inappropriate behaviour, effort to maintain relationships. 

Social Groups in Action and Interaction by Charles Stangor


  • Social Identity

“...using our group membership to feel good about ourselves. This occurs when we see the groups that we belong to as better than groups that we do not belong to.” “When our group memberships do not provide social identity, we may either leave the group…” 

Social Groups in Action and Interaction by Charles Stangor


  • Us and Them

We are evolutionarily predisposed to reject people that are not in our group. This leads to favoritism, the perception that outsiders are threats, and extreme decision making. Recategorization of who is in and who is out can help combat this problem. 

Social Groups in Action and Interaction by Charles Stangor


Political Science


  • Availability Cascade

“...a self-sustaining chain of events, which may start from media reports of a relatively minor event and lead up to public panic and large-scale government action. On some occasions, a media story about a risk catches the attention of a segment of the public, which becomes aroused and worried. This emotional reaction becomes a story in itself, prompting additional coverage in the media, which in turn produces greater concern and involvement. The cycle is sometimes sped along deliberately by “availability entrepreneurs,” individuals or organizations who work to ensure a continuous flow of worrying news.”

Thinking, Fast and Slow by Daniel Kahneman


  • Preference Falsification

"...the act of misrepresenting one’s genuine wants under perceived social pressures." Example: "Someone pompously asserts that under socialism there would be no waste (referring to wasteful development projects in Latin America). Although you find the claim preposterous, you let it go unchallenged, to avoid sparking a divisive debate." Read more.

Private Truths, Public Lies: The Social Consequences of Preference Falsification by Timur Kuran


General


  • Diffusion of Responsibility

'...a person is less likely to take responsibility for action or inaction when others are present.' '...the individual assumes that others either are responsible for taking action or have already done so. The phenomenon tends to occur in groups of people above a certain critical size and when responsibility is not explicitly assigned. It rarely occurs when the person is alone and diffusion increases with groups of three or more.' Source.


  • Moral Panic

'The process of arousing [mass] social concern over an issue – usually the work of moral entrepreneurs and the mass media.' Wiki

A Dictionary of Sociology by Oxford University Press


  • Pluralistic Ignorance

'The phenomenon in which people in a group misperceive the beliefs of others because everyone acts inconsistently with their beliefs.' Example: In a classroom, 'the students are ignorant of others' confusion because everyone is concealing it.' 

Social Psychology: Goals in Interaction 6th Ed by Douglas T. Kenrick, Steven L. Neuberg, Robert B. Cialdini [43]


  • Unintended Consequences

'...outcomes that are not the ones foreseen and intended by a purposeful action. These consequences can be put into three groups: 1) unexpected benefit, 2) unexpected drawback, and 3) perverse result. Example: 'A reward for lost nets found along the Normandy coast, offered by the French government between 1980 and 1981, resulted in people vandalizing nets to collect the reward.' Source.


Criminology

Why people commit crimes


  • Rational Choice Theory

According to the contemporary rational choice approach, law-violating behavior occurs when an offender decides to risk breaking the law after considering both personal factors (i.e., the need for money, revenge, thrills, and entertainment) and situational factors (i.e., how well a target is protected and the efficiency of the local police force). Read more.

Criminology: Theories, Patters, and typologies by Larry J. Seigel


  • Biosocial Theory

Rather than viewing the criminal as a person whose behavior is controlled solely by conditions determined at birth, most biocriminologists believe that physical, environmental, and social conditions work in concert to produce human behavior; this integrated approach is commonly referred to as biosocial theory. Read more.

Criminology: Theories, Patters, and typologies by Larry J. Seigel


  • Psychological Trait Theory

...trait theories focuses on the psychological aspects of crime, including the associations among intelligence, personality, learning, and criminal behaviour. Read more.

Criminology: Theories, Patters, and typologies by Larry J. Seigel


 

  • Neutralization Theory

They view the process of becoming a criminal as a learning experience in which potential delinquents and criminals master techniques that enable them to counterbalance or neutralize conventional values and drift back and forth between illegitimate and conventional behavior. Read more.

Criminology: Theories, Patters, and typologies by Larry J. Seigel


  • Hirschi’s Social Bond Theory

[Hirschi] assumes that all individuals are potential law violators, but they are kept under control because they fear that illegal behavior will damage their relationships with friends, parents, neighbors, teachers, and employers. Without these social ties or bonds, and in the absence of sensitivity to and interest in others, a person is free to commit criminal acts.

Criminology: Theories, Patters, and typologies by Larry J. Seigel


  • Latent Trait Theory

Their model assumes that a number of people in the population have a personal attribute or characteristic that controls their inclination or propensity to commit crimes. Suspected latent traits include defective intelligence, damaged or impulsive personality, genetic abnormalities, the physical-chemical functioning of the brain, and environmental influences on brain function such as drugs, chemicals, and injuries. Read more.

Criminology: Theories, Patters, and typologies by Larry J. Seigel


Victimology


  • Victim Precipitation Theory

'According to victim precipitation theory, some people may actually initiate the confrontation that eventually leads to their injury or death.' Example: 'A number of research efforts have found that both male and female victims have an impulsive personality that might render them abrasive and obnoxious, characteristics that might incite victimization.'

Criminology: Theories, Patters, and typologies by Larry J. Seigel


  • Lifestyle Theory

'Some criminologists believe people may become crime victims because their lifestyle increases their exposure to criminal offenders.' Example: 'People who belong to groups that have an extremely risky life—homeless, runaways, drug users—are at high risk for victimization; the more time they are exposed to street life, the greater their risk of becoming crime victims.'

Criminology: Theories, Patters, and typologies by Larry J. Seigel


  • Deviant Place Theory

'The more often victims visit dangerous places, the more likely they will be exposed to crime and violence. Victims do not encourage crime, but are victim prone because they reside in socially disorganized high-crime areas where they have the greatest risk of coming into contact with criminal offenders, irrespective of their own behavior or lifestyle.'

Criminology: Theories, Patters, and typologies by Larry J. Seigel


  • Routine Activities Theory

    'The volume and distribution of predatory crime (violent crimes against a person and crimes in which an offender attempts to steal an object directly) are closely related to the interaction of three variables that reflect the routine activities of the typical American lifestyle.' This includes 1. The availability of suitable targets, 2. The absence of capable guardians, 3. The presence of motivated offenders. 

    Criminology: Theories, Patters, and typologies by Larry J. Seigel

Chemistry

  • The Laws of Thermodynamics

First Law: 'This law says that energy is not created or destroyed; but, energy can be converted from one form to another. For example, potential energy can become kinetic energy, and electrical energy can become heat energy as in a glowing CFL. How ever, the total energy in a system remains the same. Because living systems use energy, these systems are also subject to this law.'

Concepts in Biology, 14th Ed by Eldon D. Enger, Frederick C. Ross, David B. Bailey


Physics

  • Critical Mass

It's the determination of the minimum amount of material necessary before 'a point is reached at which the chain reaction can become self-sustaining.' Example: 'If enough clap, the whole class may break into applause; if a few clap indecisively, it dwindles to an embarrassed silence.' Read More.

Modern Nuclear Chemistry by Walter D Loveland, David J. Morrissey, Glenn T. Seaborg; Micromotives and Macrobehavior by Thomas C. Schelling


Enginering

Quality Control and safety


  • Redundancy

'Redundancy is defined as the existence of more than one means for accomplishing a given task. Thus all of these means must fail before there is a system failure.' Example: backup system. Limitation: Sometimes redundancy backfires. Example: increased components leads to more complex system; workers taking less responsibility.

Reliability Engineering for Electronic Design by Normal Fuqua

'It generally is accepted that, by implementing a number of independent safety redundancies as a protection against the possible consequences of a failure, that is, whether they are catastrophic or critical, the overall risk associated with operating the system becomes acceptable because the event probability becomes more remote.'

Safety Design for Space Systems Ed by Gary Eugene Musgrave, Axel M. Larsen and Tommaso Sgobba [168]


  • Margin of Safety

'Margin of safety' is the difference between its designed level of strength and its ultimate level of strength. In other words, it's a safety buffer between the expected value and the maximum value. Example: The engineer may estimate that 10 trucks and 40 cars will generally be on the bridge at a given time. However, what happens in the rare and freakish event that 40 trucks all drive through at the same time? Well, if the engineer designed it for the typical usage, the bridge will collapse under the rare event. Limitation: increased resources needed. Read more.


  • Barriers/Inhibits

'A means for physically isolating a hazard. A barrier can be a physical interruption between an energy source and some function, a means of separating incompatible materials, or a means of isolating materials that when mixed would constitute a hazard.'

Safety Design for Space Systems Ed by Gary Eugene Musgrave, Axel M. Larsen and Tommaso Sgobba [166]


  • Fault Tolerance

'The designed-in characteristics that maintain prescribed functions or services to users despite the existence of one or more faults.'

Safety Design for Space Systems Ed by Gary Eugene Musgrave, Axel M. Larsen and Tommaso Sgobba [167]


Solution design


  • Cost / Benefit

‘Is it the best use of resources, or can greater risk reductions be achieved by spending the same money elsewhere?’

Guidelines for Design Solution for Process Equipment Failures by CCPS (Center for Chemical Process Safety)


  • Synergistic / Mutual Exclusivity Effects

‘Will this solution work in conjunction with other potential enhancements, or will its implementation eliminate other potential beneficial solutions from being considered?’

Guidelines for Design Solution for Process Equipment Failures by CCPS (Center for Chemical Process Safety)


  • Additional New Hazards

‘Will this solution create new hazards that must be evaluated?’

Guidelines for Design Solution for Process Equipment Failures by CCPS (Center for Chemical Process Safety)


general


  • Feedback Loops:

'When reactions loop back to affect themselves, a feedback loop is created'. 'There are two types of feedback loops: positive and negative. Positive feedback amplifies system output, resulting in growth or decline. Negative feedback dampers output, stabilizes the system around an equilibrium point.' 

Universal Principles of Design by William Lidwell


Statistics

  • Antifragility

'Antifragility is a property of systems that increase in capability, resilience, or robustness as a result of stressors, shocks, volatility, noise, mistakes, faults, attacks, or failures.'

Wiki


  • Correlation v Causation

Correlation does not equal causation. 


  • Law of Large Numbers

‘...as a sample size grows, its mean will get closer and closer to the average of the population as a whole.’ For the law of large numbers to occur, it must have independent randomly distributed variables. Only applicable to large numbers, it can take a long time to approach the mean. Example: A coin that is tossed, may initially result in a favour of one side, however, overtime it will balance to a probability of ½. Read more.


  • Regression Toward to Mean

When a score is extreme on the first test, it is closer to the mean on the second, and vise versa. Regression does not have a causal explanation, it is just pure statistical randomness. 'People often do not expect regression to the mean in contexts where it's bound to occur.'

Journal Article: Judgment Under Uncertainty: Heuristics and Biases (1974) by Amos Tversky & Daniel Kahneman


Business

  • Widening the Moat

Creating a stronger competitive position. The wider the 'moat', the harder it is for competitors to overpower you. This concept comes from Warren Buffett and it refers to the old strategy used to protect a castle by placing a moat around it. 


  • 10x Strategy

Identify a competitor's successful action, then copy it, but improve it by a factor of 10. For example, a strategy to get to number 1 on Google is to find out what is there, then copy it, but dramatically improve it. For example, if somebody searches for 'yoga' and the top page is '10 yoga positions', copy it by creating a page with '100 yoga positions'. Note, the factor of 10 is random, however, marginal improvements will not be effective, thus, '10x' means, 'improve upon the existing by an enormous amount.' I first came across this strategy by the expert marketer, Neil Patel.