Charlie Munger: 1. "I think it is undeniably true that the human brain must work in models. The trick is to have your brain work better than the other person's brain because it understands the most fundamental models - ones that will do most work per unit." 2. "What is elementary, worldly wisdom? Well, the first rule is that you can't really know anything if you just remember isolated facts and try and bang 'em back. If the facts don't hang together on a latticework of theory, you don't have them in a usable form." 3. "You've got to have models in your head. And you've got to array your experience—both vicarious and direct—on this latticework of models." 4. "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." 5. "It's not enough to know your own expertise area well; you have to understand the fundamental principles from other areas to be successful in the world." In other words, your life's experience is the data, and mental models are algorithms or heuristics that take this data in and help you take better decisions. Other analogy can be: **Navigation**: Like using a map to navigate through unfamiliar territory, mental models guide us through the complexity of life's challenges, helping us to chart a course and adjust as necessary. ## Comprehensive Mental Models & Heuristics Reference | **Category** | **Model/Heuristic** | **One-Line Rule** | **When to Use** | **Example Application** | **Tags** | |--------------|-------------------|------------------|-----------------|----------------------|----------| | **Decision Speed** | ICE-V Framework | Impact × Certainty × Ease × Vibe = priority | Feature prioritization, task ordering | Rate startup ideas: High impact, medium certainty, low effort, good vibe = do it | #strategy #productivity | | | 10-10-10 Rule | How will I feel in 10 min/months/years? | Emotional decisions, conflict resolution | Should I send this angry email? (No in 10 years) | #decision-making | | | Default to Action | If reversible, bias toward doing | Low-stakes choices, experiments | Launch MVP vs perfect planning | #startup #productivity | | | Energy Audit | Does this give or drain energy? | Daily scheduling, relationship choices | Meeting at 6am vs 10am for peak performance | #productivity #health | | | Two-Way Door Test | Reversible = speed, irreversible = deliberate | Resource allocation, hiring | Fire fast, hire slow | #business #strategy | | **Truth & Knowledge** | [[The Map is not the Territory]] | An abstraction of reality is not reality itself | Critical thinking, model validation | GPS says road exists but it's closed | #philosophy #perception | | | Steel Man > Straw Man | Argue against strongest opposing view | Debates, strategy sessions | Attack competitor's best features, not worst | #critical-thinking | | | Skin in the Game | Trust people with downside risk | Taking advice, choosing advisors | VCs who invest own money vs salary-only | #trust #advice | | | Via Negativa | Learn more from failures than wins | Post-mortems, research | Study failed startups > successful ones | #learning #research | | | Lindy Effect | Older = longer survival expected | Technology choices, investment | Unix, SQL still here after decades | #longevity #technology | | | Antifragile Filter | Gets stronger from stress/volatility | System design, personal habits | Muscle growth, startup resilience | #resilience #systems | | | [[Occam razor]] | The simplest explanation is usually correct | Problem solving, hypothesis testing | Debug code: check simple issues first | #science #decision-making | | **Human Nature** | Revealed Preferences | Watch actions, ignore words | Hiring, partnerships, dating | "I value work-life balance" but works 80hrs | #psychology #behavior | | | Social Proof Cascade | People follow crowds off cliffs | Marketing, trend analysis | Everyone buying crypto at peak | #psychology #social | | | Incentive Gradient | Show reward, predict behavior | Team design, policy creation | Sales team paid on revenue, not profit | #psychology #systems | | | Mimetic Desire | We want what others want | Product design, positioning | iPhone desirability through exclusivity | #psychology #marketing | | | Status Ladder | Most conflicts are about hierarchy | Team dynamics, negotiations | Engineer vs PM friction = status battle | #psychology #social | | **Systems Thinking** | [[Feedback loop]] | What you measure improves/games | KPI design, goal setting | Measure lines of code → bloated code | #business #biology | | | Second-Order Effects | Every action has consequences of consequences | Policy decisions, feature launches | Free shipping → higher prices → customer loss | #systems #strategy | | | Leverage Points | Small changes in right place = massive impact | Problem solving, optimization | Change one database query → 10x speed | #systems #optimization | | | [[Network effects]] | Value grows exponentially with users | Platform strategy, viral growth | Slack becomes more valuable with team adoption | #business #startup | | | Pareto Optimization (80/20 Rule) | 80% outcomes from 20% inputs | Resource allocation, debugging | 20% of bugs cause 80% of crashes | #business #productivity | | | [[Entropy]] | Measure of disorder in a system | Understanding system degradation | Code becomes messy without maintenance | #physics #business | | | [[Maximum entropy]] | State of maximum disorder | System design, risk management | System will tend toward chaos without regulation | #physics #thermodynamics | | | [[Equilibrium]] | State of balance where forces are matched | Decision-making in systems | Market price where supply meets demand | #economics #business | | | Bottlenecks | Constraints that limit system capacity | Process optimization | Database query limiting app performance | #business #productivity | | | Scale | System's ability to handle growth | Business planning, architecture | Can your database handle 10x users? | #business #technology | | **Risk & Probability** | Barbell Strategy | Extreme safety + extreme risk = optimal | Portfolio allocation, career moves | 90% safe investments + 10% high-risk bets | #risk #investment | | | Asymmetric Bets | Limited downside, unlimited upside | Startup ideas, experiments | Angel investing, side projects | #risk #opportunity | | | Expected Value | Probability × payoff = decision metric | Gambling, business decisions | 1% chance of $1M vs 50% chance of $1K | #probability #decision-making | | | Kelly Criterion | Bet size = edge ÷ odds | Position sizing, resource allocation | How much to invest in proven strategy | #investment #risk | | | Black Swan Awareness | Rare events dominate everything | Risk management, scenario planning | COVID impact on business models | #risk #planning | | | [[Sunk cost fallacy]] | Don't continue based on past investment | Decision-making, relationships | Don't finish bad movie because you paid | #relationships #business #startup | | | Law of Diminishing Returns | Incremental benefits decrease with more resources | Resource optimization | Adding more developers doesn't always help | #economics #business | | | Butterfly Effect | Small changes lead to large outcomes | Planning, risk assessment | One bug can crash entire system | #business #relationships | | | Margin of Safety | Buffer between actual and minimum value | Investment, planning | Buy stock at 50% of intrinsic value | #business #finance | | **Communication** | Pyramid Principle | Conclusion first, then evidence | Presentations, emails, reports | "We should pivot because..." then data | #communication #business | | | Show Don't Tell | Demonstration > explanation | Product demos, teaching | Live coding vs PowerPoint about code | #communication #teaching | | | Mental Model Sharing | "Here's how I think about this" | Collaboration, mentoring | Share decision framework before conclusion | #communication #leadership | | | Cringe Test | Uncomfortable to say = probably true | Difficult conversations, feedback | "Your code quality is declining" | #communication #truth | | | Compression Test | Can't explain simply = don't understand | Learning validation, teaching | Explain AI to grandmother | #communication #learning | | **Building & Creating** | Minimum Viable Everything | Ship smallest thing that teaches | Product development, content | Blog post before book, prototype before product | #startup #product | | | [[Compound interest]] | Small consistent > big sporadic | Skill building, relationship building | Daily writing vs weekend binges | #finance #investment | | | Optionality Creation | Build multiple paths to success | Career strategy, product roadmap | Full-stack skills open more doors | #strategy #career | | | Adjacent Possible | Next breakthrough = one step away | Innovation, research direction | iPhone = iPod + phone + internet | #innovation #research | | | Emergence Over Planning | Complex systems guided, not designed | Team management, product evolution | Culture emerges from actions, not mission statements | #systems #management | | | [[First Principles]] | Break to fundamental truths, rebuild | Problem solving, innovation | SpaceX rocket cost from materials up | #innovation #business #education | | | Critical Mass | Minimum needed for self-sustaining process | Business growth, network building | Product needs X users to be valuable | #business #networks | | | [[Activation energy]] | Energy required to initiate process | Goal setting, habit formation | Making gym clothes visible reduces startup friction | #business #productivity | | **Personal OS** | Energy > Time Management | Protect peak hours | Daily scheduling, deep work | Code during morning energy, meetings after lunch | #productivity #health | | | Keystone Habits | One habit triggers others | Behavior change, productivity | Exercise → better sleep → better focus | #productivity #health | | | Identity-Based Change | "I am someone who..." vs "I want to..." | Goal setting, habit formation | "I'm a runner" vs "I want to run" | #psychology #habits | | | Progress Measurement | What gets tracked gets optimized | Personal development, fitness | Daily code commits, weekly reflection | #productivity #measurement | | | Environmental Design | Change context to change behavior | Productivity, health | Phone in other room for focus | #productivity #environment | | **Market & Competition** | Competitive Moats | What makes you un-copyable? | Strategy, positioning | Network effects, switching costs | #business #strategy | | | Blue Ocean Strategy | Create new markets vs fight existing | Product strategy, positioning | Create "AI agents" category vs "RPA" | #business #innovation | | | Jobs-to-be-Done | People hire products for specific jobs | Product development, marketing | Hire milkshake for breakfast entertainment | #business #product | | | Platform Dynamics | Connect producers + consumers = winner-take-all | Business model, growth strategy | App stores, marketplaces | #business #platforms | | | Timing Beats Everything | Right idea at wrong time = failure | Market entry, feature launches | Social video before mobile bandwidth | #business #timing | | | Churn | Rate customers leave product/service | Customer retention analysis | Monthly subscription cancellation rate | #business #metrics | | | Counter-Positioning | New model incumbent can't copy without damage | Competitive strategy | Netflix vs Blockbuster business models | #business #strategy | | | Switching Costs | Value loss from changing suppliers | Customer retention strategy | Apple ecosystem lock-in | #business #marketing | | | Branding | Higher value from reputation/history | Marketing, positioning | Premium pricing for known brands | #business #marketing | | | Cornered Resource | Preferential access to coveted assets | Strategic planning | Exclusive supplier relationships | #business #strategy | | | Process Power | Embedded organization enabling advantages | Operations optimization | Toyota Production System | #business #operations | | **Meta-Learning** | Inversion | Solve by considering opposite/failure | Problem solving, risk management | How to guarantee startup failure? | #thinking #strategy | | | Analogical Reasoning | Pattern match across domains | Learning, creativity | Immune system → cybersecurity patterns | #learning #creativity | | | Falsification Bias | Seek evidence that proves you wrong | Hypothesis testing, decision validation | Try to disprove your startup idea | #science #thinking | | | Mental Model Accumulation | Collect decision tools like apps | Continuous learning, better judgment | Regular model practice and application | #learning #improvement | | | [[Isomorphism]] | Similar structures in different areas | Pattern recognition, problem solving | Social networks and neural networks | #education #research | | | [[Heisenberg uncertainty principle]] | More precision in one area = less in another | Knowledge limits, trade-offs | Focus vs flexibility in planning | #physics #philosophy | | **Advanced Concepts** | [[Algorithms]] | Step-by-step problem-solving procedures | Systematic thinking, automation | Decision trees for hiring process | #computing #math | | | Complex Adaptive Systems | Many interacting components that evolve | Understanding emergence, organizations | Ant colonies, market dynamics | #biology #business | | | [[Emergence]] | Complex patterns from simple interactions | System design, culture building | Twitter conversations from 280 characters | #biology #computing | | | [[Chaos]] Dynamics | Unpredictable behavior from simple rules | Planning limits, system behavior | Weather prediction limitations | #math #physics | | | [[Irreducibility]] | Systems that can't be simplified | Accepting complexity, holistic thinking | Human consciousness can't be reduced | #philosophy #complexity | | | [[Distributions cheat sheet\|Distributions]] | How data spreads and patterns within | Data analysis, trend understanding | Normal distribution vs power law | #statistics #research | | | Sampling | Selecting representative subset for analysis | Research methodology, testing | A/B testing user behavior | #statistics #research | | | Randomness | Unpredictability of outcomes | Planning for uncertainty | Market movements, user behavior | #math #philosophy | | | Regression to the Mean | Extreme values move toward average | Performance analysis, expectations | Star employee performance over time | #statistics #sports | | | Multiplying by Zero | Any effort × zero factor = zero | Risk identification, critical dependencies | Perfect product with no distribution | #math #productivity | | | Equivalence | Two things equal in value/meaning | Value comparison, decision making | Time vs money trade-offs | #philosophy #logic | | | Order of Magnitude | Scale expressed as powers of 10 | Quick estimation, planning | Rough cost estimates for projects | #math #physics | | | Surface Area | Total area object occupies | Exposure analysis, contact optimization | API surface area for security | #geometry #engineering | | | Global and Local Maxima | Peak values globally vs locally | Optimization, avoiding local traps | Finding best solution vs good enough | #math #data-analysis | | | [[Pruning]] | Remove unnecessary components for optimization | Optimization, focus, maintenance | Code refactoring, team restructuring | #biology #computing #business | | | Scale Economies | Cost advantages from production expansion | Business growth strategy | Manufacturing cost per unit decreases | #business #economics | | | Network Economies | Advantages from large user/partner networks | Platform business models | More users = more valuable for all | #business #economics | | | Physical Network Effects | Value from physical infrastructure connections | Infrastructure planning | Telephone networks, cable systems | #business #infrastructure | | | Protocol Network Effects | Value from standard adoption | Technology strategy | HTTP, TCP/IP protocol adoption | #technology #standards #business | | | Personal Utility Network Effects | Value tied to personal identity/daily use | Product stickiness | Email, messaging apps | #social #technology #business | | | Personal Network Effects | Identity/reputation tied to product | Social product strategy | LinkedIn professional identity | #social #reputation #business | | | 2-Sided Network Effects | Two user classes create mutual value | Marketplace strategy | Uber: drivers and riders | #business #marketplaces | | | Data Network Effects | More usage yields more useful data | Data strategy, AI products | Better recommendations with more data | #data #technology #business | | | Tech Performance Network Effects | Performance improves with more users | Technology architecture | Peer-to-peer networks | #technology #performance #business | | | Social Network Effects | Psychology drives network value | Social product design | Language adoption, belief systems | #social #psychology #business | | | Compounding | Value increases exponentially over time | Long-term strategy, investment | Code reuse, relationship building | #finance #investment #health #relationships | | | [[Ergodicity]] | Statistical properties from single sample over time | Long-term planning, risk assessment | Individual vs ensemble averages | #statistics #economics #physics | | | [[Convexity]] | Non-linear relationship between variables | Risk management, option value | Interest rate sensitivity | #math #finance #economics | | | Kolmogorov Complexity | Shortest program producing given output | Simplicity measurement, theory evaluation | Occam's razor quantified | #information-theory #complexity #data-analysis | | | Surplus Creation | Value generation beyond costs | Business model design | How much value does product create? | #business #economics #strategy | | | Surplus Allocation | How created value is distributed | Pricing strategy, stakeholder management | Customer vs company vs employee value | #business #economics #pricing | | | Orders of Magnitude | Powers of 10 for estimation | Quick decision-making, planning | Is this a $1K or $1M problem? | #math #planning #strategy | | | Insufficient Information | Operating with incomplete data | Decision-making under uncertainty | Launch without perfect market research | #decision-making #risk-management | | | Cost of Information | Resources vs value of additional data | Research optimization | When to stop gathering data and decide | #economics #research #strategy | | | Trade-offs | Choices involve giving up benefits | Explicit decision framework | Speed vs quality in development | #decision-making #strategy | | | Focus | Concentrate resources on priorities | Resource allocation, attention management | Say no to good opportunities for great ones | #productivity #strategy | | | Bets | Decisions as probability-based investments | Strategic thinking, portfolio approach | Diversify initiatives like investments | #risk-management #strategy | | | Bet Sizing | Resource allocation by probability/return | Investment strategy, resource allocation | Size team investment by confidence level | #investment #risk-management | | | Customer Need Focus | Center decisions on solving problems | Product development, market fit | Build what customers actually need | #business #product-development | | | Learning Engine | Systems generating insights through operation | Continuous improvement, knowledge creation | A/B testing creates learning compounds | #business #innovation | | | Hill Climbing | Iterative improvement through testing | Optimization processes, continuous improvement | Local optimization vs global maximum | #optimization #strategy | | | Curves | How variables relate over time/scale | Relationship modeling, prediction | Learning curves, adoption curves | #math #strategy | | | Compounding Returns | Benefits multiply through reinvestment | Growth strategy, network building | Reputation compounds over time | #finance #strategy | ## Quick Reference by Use Case **For Startups**: ICE-V Framework, Network Effects, Jobs-to-be-Done, Minimum Viable Everything, Customer Need Focus, Asymmetric Bets **For Personal Productivity**: Energy Audit, Keystone Habits, Pareto Principle, Environmental Design, Focus, Progress Measurement **For Decision Making**: 10-10-10 Rule, Expected Value, Two-Way Door Test, Steel Man vs Straw Man, First Principles **For Risk Management**: Barbell Strategy, Black Swan Awareness, Margin of Safety, Kelly Criterion, Antifragile Filter **For Understanding Systems**: Feedback Loops, Second-Order Effects, Emergence, Complex Adaptive Systems, Bottlenecks **Meta-heuristic**: The best heuristics are **memorable, actionable, and generalizable** across domains. They compress complex reality into simple decision rules. <iframe src="https://link.excalidraw.com/readonly/8sJ3sq4iCUPEU2LZQ3VS" width="100%" height="600px" style="border: none;"></iframe> If you're interested in diving further in Mental Models, I highly recommend: - [Charlie Munger](https://www.goodreads.com/en/book/show/944652) - [fs.blog & The Knowledge Project Podcast & Shane Parrish books](https://fs.blog/) - [[20240817 Taleb mental models]] - [[2024-11-16 7 power cheatsheet]] - [[Mental Models in Design]] #cheatsheet #mental-model