PRISONER’s DILEMMA“The prisoners' dilemma is the best known strategy game in social science. The game shows why two entities might not cooperate even when it appears in their best (rational) interest to do so. What is rational for the individual in certain circumstances is not rational for the group — that is, pursuing a strategy that is rational for you leads to a worse outcome.
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COMPARATIVE ADVANTAGE Counterintuitive but so powerful! The Scottish economist David Ricardo had an unusual and non-intuitive insight: Two individuals, firms, or countries could benefit from trading with one another even if one of them was better at everything
THOUGHT EXPERIMENT “Thought experiments push us outside our comfort zone by forcing us to confront questions we cannot answer with ease. They reveal that we do not know everything and some things cannot be known.” Thought experiments help us to explore various concepts, hypothesis or ideas througth extensive thinking (reasoning, reflection and etc.). I found it as a very useful concept to find out how Events Causes Outcomes. Visual thinking method helped me to better understand types of ...
HANLON’S RAZORMisunderstandings and neglect create more confusion in this world than trickery and malice. At any rate, the last two are certainly much less frequent.Goethe wrote in The Sorrows of Young Werther.More on how to avoid common missteps in judgment on farnam street blog: https://www.fs.blog/2017/04/mental-model-hanlons-razor/
FALSIFICATION“When it comes to testing a theory we don't instinctively try to find evidence we're wrong. It's much easier and more mentally satisfying to find information that proves our intuition”https://www.fs.blog/2014/02/peter-cathcart-wason-falsification/
The best way to make Intelligent Decisions is to use Mental Models. Explore these fundamental and timeless principles through my sketches. Its more easier to remember, pictures communicate concepts in a clear way and its much more enjoyable learning ... https://fundamentalmodels.tumblr.com/
Buy Icons Set of Business Management - part 4 by enotmaks on GraphicRiver. Vector set of 48 icons related to business management, strategy, career progress and business collaboration.
MAP IS NOT A TERRITORYBrain is creating abstractions in order to understand complex systems with all details and relationships. But the abstraction/model/map does not present the reality. Therefore we always have to be and ask ourselves questions to understand the limits of the map.Step back, apply helicopter view and try to understand the context in which the map is useful.Step back, apply helicopter view and try to understand the context in which the map is…
CONFIRMATION BIAS part 2This logical fallacy helps us understand why we should be cautious of data that seems to immediatelly support our perspectives and beliefs.More on this topic, but please be cautious about what you are reading :Phttps://www.fs.blog/2017/05/confirmation-bias/
CONFIRMATION BIAS“What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact.”— Warren Buffett“Failing to interpret information in an unbiased way can lead to serious misjudgments. By understanding this, we can learn to identify it in ourselves and others. We can be cautious of data that seems to immediately support our views.”More about this fundamental cognitive bias can be foun…
2ND ORDER THINKING part 2 This mental model deserves more attention therefore I’ll share more important concpets in order to build solid foundation. Explore more on Farnam Street : https://www.farnamstreetblog.com/2016/04/second-level-thinking/
CIRCLE OF COMPETENCE“So, the simple takeaway here is clear. If you want to improve your odds of success in life and business then define the perimeter of your circle of competence, and operate inside. Over time, work to expand that circle but never fool yourself about where it stands today, and never be afraid to say “I don’t know.”https://www.farnamstreetblog.com/2013/12/mental-model-circle-of-competence/
2ND ORDER THINKING part 3“The goal is not blind divergence but rather a way of thinking that sets you apart from others. A way of thinking that gives you an advantage.We can look at this as a simple two-by-two matrix (via book named The Most Important Thing).I’m generalizing a bit here, but if your thoughts and behavior are conventional, you’re likely to get conventional results.”https://www.farnamstreetblog.com/2016/04/second-level-thinking/
2ND ORDER THINKIG“Decision making is as much art as science. The goal, if we have one, is not to make perfect decisions but rather to make better than average decisions and get better over time. Doing this requires better insight or making fewer errors.” Read about one of the most important mental models on Farnam Street: https://www.farnamstreetblog.com/2016/04/second-level-thinking/