Mental Model Inventory

Mental models that help cut through complexity, reduce bias, and make better decisions

  1. First Principles Thinking Break problems down to their most basic elements and build up from there.

    • Used by: Aristotle, physicists
    • Example: Instead of assuming existing car battery costs, Tesla rethought material sourcing to lower prices.

  2. Bayesian Thinking Update beliefs based on new evidence rather than sticking to initial assumptions.

    • Used in: AI, medicine, decision-making under uncertainty
    • Example: If a test is 95% accurate but the base rate of the disease is low, the actual chance of having it may still be low.

  3. Expected Value Weigh potential outcomes by their probability and impact rather than relying on gut instinct.

    • Used in: Investing, business strategy, poker
    • Example: If a decision has a 10% chance of a 100x return, it may still be worth pursuing.

  4. Inversion (Thinking Backwards) Instead of asking “How do I succeed?” ask “How do I fail?” and avoid those mistakes.

    • Used by: Charlie Munger, Stoic philosophers
    • Example: If you want to live a good life, avoid regret—don’t ignore health, relationships, or lifelong learning.

  5. Occam’s Razor The simplest explanation is usually the best.

    • Used in: Science, troubleshooting, decision-making
    • Example: If you hear hoofbeats, think horses, not zebras (unless you’re in Africa).

  6. Hanlon’s Razor Never attribute to malice what can be explained by incompetence or ignorance.

    • Used in: Conflict resolution, leadership, interpreting behavior
    • Example: That rude email probably wasn’t personal—the sender might just be stressed.

  7. Second-Order Thinking Always consider the longer-term consequences beyond the immediate result.

    • Used in: Policy-making, investing, product strategy
    • Example: Rent control helps tenants short-term but may reduce housing supply long-term.

  8. Compounding Effects Small, consistent actions over time create massive long-term results.

    • Used in: Finance, habits, learning
    • Example: Reading 10 pages a day equals 12+ books a year.

  9. Circle of Competence Know what you know, and don’t pretend expertise where you have none.

    • Popularized by: Warren Buffett
    • Example: If you don’t understand cryptocurrency, don’t invest in it.

  10. The 80/20 Rule (Pareto Principle) 80% of results come from 20% of causes—focus on the highest-leverage activities.

    • Used in: Business, productivity, investing
    • Example: 20% of customers often drive 80% of revenue.

  11. The Red Queen Effect To stay ahead, you must keep improving just to maintain your position.

    • Used in: Business competition, evolution, career growth
    • Example: If you’re not learning new skills, you’re falling behind.

  12. Game Theory Some games are about beating the opponent, others are about growing the pie.

    • Used in: Negotiations, diplomacy, business strategy
    • Example: A company’s success isn’t about crushing competition but creating new value.