all over the place
“I just try and avoid being stupid. I have a way of handling a lot of problems. I put them on what I call my too-hard pile. Then I just leave them there. I’m not trying to succeed in my too-hard pile.”
Charlie Munger
(in this at Caltech from last week. Complement with this talk on the Psychology of Human Misjudgment)
“To the man with a hammer, everything looks like a nail.”
The Best Way to Make Intelligent Decisions
Charlie Munger summed up the approach to practical wisdom through understanding mental models by saying:
“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. 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. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head.”
THE LIST
if you know all the concepts and principles listed below (only 109…), you will know how to interpret most of things that will happen to you during your life…
General Thinking Concepts
1. The Map is not the Territory
1. Permutations and Combinations
2. Algebraic Equivalence
3. Randomness
4. Stochastic Processes (Poisson, Markov, Random Walk)
5. Compounding
7. Churn
8. Law of Large Numbers
9. Bell Curve/Normal Distribution
10. Power Laws
12. Order of Magnitude
1. Scale
2. Law of Diminishing Returns
3. Pareto Principle
4. Feedback Loops (and Homeostasis)
5. Chaos Dynamics (Butterfly Effect)/ (Sensitivity to Initial Conditions)
6. Preferential Attachment (Cumulative Advantage)
7. Emergence
8. Irreducibility
10. Gresham’s Law
11. Algorithms
12. Fragility – Robustness – Antifragility
13. Backup Systems/Redundancy
14. Margin of Safety
15. Criticality
16. Network Effects
17. Via Negativa – Omission/Removal/Avoidance of Harm
18. The Lindy Effect
19. Renormalization Group
20. Spring-loading
1. Laws of Thermodynamics
2. Reciprocity
3. Velocity
4. Relativity
6. Catalysts
7. Leverage
8. Inertia
9. Alloying
10. Viscosity
1. Incentives
2. Cooperation (Including Symbiosis and Prisoner’s Dilemma)
3. Tendency to Minimize Energy Output (Mental & Physical)
4. Adaptation
5. Evolution by Natural Selection
6. The Red Queen Effect (Co-evolutionary Arms Race)
7. Replication
8. Hierarchical and Other Organizing Instincts
9. Self-Preservation Instincts
10. Simple Physiological Reward-Seeking
11. Exaptation
12. Ecosystems
13. Niches
14. Dunbar’s Number
1. Trust
2. Bias from Incentives
3. Pavlovian Association
4. Tendency to Feel Envy & Jealousy
5. Tendency to Distort Due to Liking/Loving or Disliking/Hating
6. Denial
8. Representativeness Heuristic
a. Failure to Account for Base Rates
b. Tendency to Stereotype
c. Failure to See False Conjunctions
9. Social Proof (Safety in Numbers)
11. Curiosity Instinct
12. Language Instinct
13. First-Conclusion Bias
14. Tendency to Overgeneralize from Small Samples
15. Relative Satisfaction/Misery Tendencies
16. Commitment & Consistency Bias
17. Hindsight Bias
19. Tendency to Overestimate Consistency of Behavior (Fundamental Attribution Error)
20. Influence of Stress (Including Breaking Points)
22. Tendency to Want to Do Something (Fight/Flight, Intervention, Demonstration of Value, etc.)
23. Falsification / Confirmation Bias
1. Opportunity Costs
2. Creative Destruction
4. Specialization (Pin Factory)
5. Seizing the Middle
6. Trademarks, Patents, and Copyrights
7. Double-Entry Bookkeeping
8. Utility (Marginal, Diminishing, Increasing)
9. Bottlenecks
10. Bribery
11. Arbitrage
13. Scarcity
14. Mr. Market
1. Seeing the Front
2. Asymmetric Warfare
3. Two-Front War
5. Mutually Assured Destruction
