The more tools you have at your disposal, the more likely you’ll use the right tool for the job. The same is true when it comes to your thinking. The quality of your outcomes depends on the mental models in your head.

This book consists of 9 mental models which can be used to better understand the world and make smarter decisions.

General Thinking Concepts:

  1. The Map is not the Territory - Reality check
  2. Circle of Competence - What you know and don’t know
  3. First Principles Thinking - Go back to basics
  4. Thought Experiment - Imagine the possibilities
  5. Second-Order Thinking - What happens next?
  6. Probabilistic Thinking - What are the chances?
  7. Inversion - Change your perspective
  8. Occam’s Razor - Keep it simple
  9. Hanlon’s Razor - Don’t assume the worst

Supporting Ideas:

  1. Falsifiability
  2. Necessity and Sufficiency
  3. Causation vs. Correlation

General Thinking Concepts: —

1. The Map is not the Territory - Reality check

  • Maps can be anything: From travelling to a new city, to becoming a parent. Stereotypes are also maps.
  • Maps help us navigate that terrain. But we should update them based on our own experiences in the territory.
  • Reality is the ultimate update.
  • What worked then, wouldn’t or shouldn’t work now

Eg. Newtonian physics map which Einstein changed.

The tragedy of commons : What is common to many is taken care the least

2. Circle of Competence - What you know and don’t know

How to maintain Circle of Competence?

  • The world is dynamic, knowledge gets updated, and so too must our circle.
  • Curiosity, Desire to Learn, Monitoring and Feedback.
  • Get a COACH!!

How to operate outside Circle of Competence?

  • Learn atleast the basics, while acknowledging your are a stranger and not a lifer.
  • Talk to someone whose Circle of Competence in that field is strong.

Eg. Sherpas in the Himalayas has their CoC in hiking the Himalayas
Queen Elizabeth I make a council of advisors.

3. First Principles Thinking - Go back to basics

Tool to separate facts and assumptions.

There may be a million methods, but only a few principles.\ Understand principles to successfully select your won methods.

2 techniques:

  • Socrates Questioning
  • 5 Why’s
    • If this results in a statement, it is the first principle.
    • If this results in “it just is”, it is based on popular opinion

To improve something, we need to understand why it is successful or not. Even incremental improvement is not possible if we don’t identify the first principles.

4. Thought Experiment - Imagine the possibilities

Thought experiment is the device of the imagination used to investigate the nature of things

Creativity is intelligence having fun

Steps:

  • Ask a question
  • Conduct background research
  • Construct hypothesis
  • Test with thought experiments
  • Analyze outcomes and draw conclusions
  • Compare to hypothesis and adjust

A thought experiment allows us to verify if our natural intuition to correct by running experiments in our conscious minds to make a point clear.

In order to improve our decision making and increase our own chances of success, we must be willing to prove all of the possibilities we can think of.

Eg. Lebron James vs Woody Allen (who would win?)
Einstein in the elevator with glued feet
Trolley experiment - The problem of abortion and the doctrine of double effect

5. Second-Order Thinking - What happens next?

“Always consider the effects of effects - Law of Unintended Consequences”

  • Prioritize long term benefits over immediate gains
  • Arguments are more effective if we consider the second-order effects and put effort into verifying that they are desirable as well.
  • If we are worried about all the possible effects of effects of our actions, we would likely never do anything, and we’d be wrong.
  • How you’ll balance the need for higher-order thinking with practical, limiting judgement must be taken on a case by case basis.
  • A little time spent thinking ahead can save us massive amounts of time later.

Eg. Rewards for dead snakes in Delhi caused more snakes to be bred and killed.
Cleopatra siding with Caesar.

6. Probabilistic Thinking - What are the chances?

Estimate the likelihood of any specific outcome coming to pass.

Bayesian Thinking

  • Take into account what we already know when we learn something new
  • Use all relevant prior information in making decisions.

Fat-tailed curves

  • Bell curve - Extremes are predictable. Deviation from the mean is predictable
  • Fat-tail curve - No cap on extreme events. The more extreme events possible, the higher the probability that one of them will occur.

Asymmetries

  • Metaprobability: The probability that your probability estimates themselves are good.
  • Estimation errors are asymmetric.
    • Eg. Estimate the effect of traffic on travel time:
      Leave on time, arrive 20% early: NEVER
      Leave on time, arrive 20% late: ALWAYS

Orders of magnitude

Nassim Taleb in Black Swan:

  • Small error in measuring the risk of an extreme event can mean we’re not just slightly off, but way off in orders of magnitude.
    Not 10% wrong, but 100 or 1000 times wrong.

  • It is important to deal with fat-tail domains by positioning ourselves to survive or benefit from the widely unpredictable future, by planning for a world we don’t understand.

Antifragility

Nassim Talem in Antifragile:

The anti-fragile mindset is a unique one. Whenever possible try to create scenerios where randomness and uncertainity are your friends and not your enemies.

  • 2 ways to deal with volatile environments:
    • Predict : never works
    • Prepare : Arm ourselves with anti-fragility so we can benefit from the volatility of the world.
  • How to prepare?
    1. Upside Optionality
      • Seek out situations that we expect, have good odds of offering us opportunities. Eg. A party with important guests and nothing to lose.
    2. Learn how to fail properly
      • Never take a risk where your are taken out of the game completely (100% loss)
      • Develop personal resilience to learn from failures and start again.

7. Inversion - Change your perspective

Inversion is powerful tool, which helps you identify and remove obstacles to success.

  • Approach a situation from the opposite end of the normal starting point. - Flip the problem around and think backward
  • Start by assuming that what you’re trying to prove is either True or False, then show what else would have to be true.
  • INVERT when stuck!!

Eg. Jacobi solving Math theorems by assuming the hypothesis is true and working backwards
Lucky Strike sold cigarettes to women by creating an environment for women to smoke. (Selling cigarettes instead of sweets to improve body shape, and making small kitchen canisters to hold cigarettes)

8. Occam’s Razor - Keep it simple

Simpler explanations are more likely to be true than complicated ones.

“Anybody can make the simple complicated. Creativity is making the complicated simple”

  • If all else is equal, i.e if two competing models both have equal explanatory power, it’s more likely that the simple solution suffices.

Eg. Take 2 competing explanations, each of which seem to equally explain a given phenomenon:

If one of them requires the interaction of 3 variables and the other the interaction of 30 variables, which of these is more likely to be in error?

If each variable has a 99% chance of being correct:
The first explanation is only 3% likely to be wrong.
The second more complex explanation is about 9 times as likely to be wrong or 26%

9. Hanlon’s Razor - Don’t assume the worst

We should not attribute to malice (desire to cause harm to another), that which is more easily explained by stupidity.

Devil Fallacy - To attribute conditions to villainy, that simple result from stupidity.

  • Failing to prioritize stupidity over malice causes things like paranoia.
  • Malice puts you at the center of everyone else’s world. This is an incredibly self-centered approach to life.
  • In reality, for every act of malice, there is almost certainly far more ignorance, stupidity and laziness.

Eg. How Arkhinov saved the world from a nuclear launch.

Supporting Ideas: —

Falsifiability

If a theory cannot be proven false, because there is no way of testing them, then the best we can do is trying to determine the probability of being true.

Necessity and Sufficiency

Necessary conditions for success ~= Sufficient conditions for success

Causation vs. Correlation

We notice 2 things happening at the same time (corelation) and mistakenly conclude that one causes the other (causation).