Mental Models

colorful-brain

I was attracted to the mental models framework when I read about Charlie Munger. He taught us that we need to learn several big ideas from various disciplines, and connect them using a latticework of theory. He called them “Latticework of Mental Models”.

Here is what he said in his speech at USC Business School in 1994:

What is elementary, worldly wisdom? Well, the first rule is that you can’t really know anything if you just remember isolated facts and just try to bang them back. If the facts don’t hang together on a latticework of theory, you don’t have them in usable form.

You have got to have models in your head. And you have 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 fail in life. You have got to hang experience on a latticework of models in your head.

What are the models? Well, the first rule is that you have got to have multiple models—because if you have just one or two that you are using, the nature of human psychology is such that you will torture reality so that it fits your models, or at least you will think that it does. You become the equivalent of a chiropractor who, of course, is the great boob in medicine.

It is like the old saying, “To the man with only a hammer, every problem looks like a nail.” And of course, that is the way the chiropractor goes about practicing medicine. But that is a disastrous way to think and operate in the world. So you have got to have multiple models.

And the models have to come from multiple disciplines—because all the wisdom is not to be found in one little academic department. That is why poetry professors, by and large, are so unwise in a worldly sense. So you have got to have multiple models across an array of disciplines.

You may say, “My God, this is already getting way too tough.” But fortunately, it is not that tough—because 80 to 90 important models will carry about 90% of the freight in making you a worldly-wise person. And, of those, only a mere handful really carries very heavy freight.

I am attempting to learn these models, one a week. Here are the ones I am starting with:

Psychology

Anchoring bias

Confirmation bias

Curse of knowledge

Mental accounting

Hindsight bias

Decision making

Inversion

Bayes’ theorem

Pascal’s wager

Game theory

Sunk cost

Systems thinking

Feedback loops


Sources:

Full text of Charlie Munger’s USC speech

Image source: Pixabay