Mental models

Twenty I keep close.

  1. 1. Circle of Competence Know the edge of what you actually know, and stay inside it when the downside is real.
  2. 2. Inversion Start with how this fails, then design so those paths are closed.
  3. 3. Second-Order Thinking Effects have effects; the second move often matters more than the first.
  4. 4. Opportunity Cost Every yes is a no to something else; price that explicitly.
  5. 5. Margin of Safety Build room for being wrong before you need it.
  6. 6. Mr. Market Markets have moods; use them, don’t marry them.
  7. 7. Probabilistic Thinking Assign odds, don’t demand certainty.
  8. 8. Bayes / Updating Change your mind when the evidence changes.
  9. 9. Falsification Prefer beliefs you could prove wrong.
  10. 10. Occam’s Razor Prefer the simple explanation when it still fits the facts.
  11. 11. Hanlon’s Razor Don’t assume malice when stupidity or error is enough.
  12. 12. Map Is Not the Territory The model is useful and incomplete; don’t confuse it with reality.
  13. 13. Incentives Show me the incentives and I’ll show you the behaviour.
  14. 14. Skin in the Game Trust people who share the downside.
  15. 15. Compounding Small edges, kept for a long time, beat clever bursts.
  16. 16. Leverage Find points where a small input moves a large system.
  17. 17. Activation Energy The hard part is often starting; design for that.
  18. 18. Feedback Loops Build systems that tell you the truth early.
  19. 19. Via Negativa Often improve by removing what doesn’t work.
  20. 20. Regret Minimisation Prefer the choice you’ll respect in ten years.