Mental model list

Research

Confirmation Bias

Be aware of searching for or interpreting information in a way that confirms your ideas, thoughts.

How often – I continue reflecting – is it that we see what we want to see, rather than what is really before our eyes. In the trade, we call this confirmation bias, and our brains are riddled with it. We take a position on something and thereafter only see whatever confirms that position, ignoring all evidence to the contrary.
― John Dolan, Everyone Burns

Availability Bias

Be aware of counting only on available information when assessing a particular topic, method or decision.

We are all vulnerable to manipulation. We make judgments based on the information available to us, but we are all susceptible to manipulation when our access to that information becomes mediated. Over time, our biases can become amplified without our even realising it.
— Christopher Wylie, Mindf*ck: Inside Cambridge Analytica’s Plot to Break the World

Bandwagon Effect

Be aware of supporting certain behaviours or attitudes simply because others are doing so.

When you hear the same story everywhere you look and listen, you assume it must be true. And the more people believe it’s true, the more likely they are to repeat it, and thus the more likely you are to hear it. This is how inaccurate information can create a bandwagon effect, leading quickly to a broad, but mistaken, consensus.
― Barry Schwartz, The Paradox of Choice: Why More Is Less

Mistakes that will be made

Stand on the shoulders of giants by learning from other founders’ mistakes and applying the lessons flexibly.

Learn from the mistakes of others. You can’t live long enough to make them all yourself.
― Eleanor Roosevelt

Reasoning For Planning

Circle Of Competence

Learn about yourself to know what you know and where you need help. 

Know your circle of competence, and stick within it. The size of that circle is not very important; knowing its boundaries, however, is vital.
— Warren Buffet

Some thought

Backward Reasoning

Start with goals and look for the initial conditions that form a path to them.

I always try to start out with some type of goal. Then I work backwards and think of what I need to do to get there and give myself smaller goals that are more immediate.
— Kristi Yamaguchi

Some thought

Inversion

Think of the unwanted outcomes and plan to avoid them. 

Invert, always invert: Turn a situation or problem upside down. Look at it backwards. What happens if all our plans go wrong? Where don’t we want to go, and how do you get there? Instead of looking for success, make a list of how to fail instead. Tell me where I’m going to die, that is, so I don’t go there.
— Charlie Munger

Some thought

First Principles Thinking

Break complex things into the most fundamental truths to reason.

First principles is kind of a physics way of looking at the world, and what that really means is, you … boil things down to the most fundamental truths and say, “okay, what are we sure is true?” … and then reason up from there.
― Elon Musk

Some thought

Second Level Thinking

Keep questioning (e.g. “what’s next?”) to understand the situation from a higher perspective and to compare the decision’s short and long-term impacts.

Failing to consider second-and third-order consequences is the cause of a lot of painfully bad decisions, and it is especially deadly when the first inferior option confirms your own biases. Never seize on the first available option, no matter how good it seems, before you’ve asked questions and explored.
— Ray Dalio, Principles

Leverage

Exchange resources (e.g. time, energy) in a way that maximises the outputs.

A manager must keep many balls in the air at the same time and shift his energy and attention to activities that will most increase the output of his organization. In other words, he should move to the point where his leverage will be the greatest.
— Andrew S. Grove, High Output Management

Thought Experiment

Use imagination to think through the consequences of a vision, hypothesis, or idea.

Thought experiment is in any case a necessary precondition for physical experiment. Every experimenter and inventor must have the planned arrangement in his head before translating it into fact.”

– Ernst Mach

Thinking Grey

Pause on instant judgments and sleep on decisions to gather more information if time permits.

Most people are binary and instant in their judgments; that is, they immediately categorize things as good or bad, true or false, black or white, friend or foe. A truly effective leader, however, needs to be able to see the shades of gray inherent in a situation in order to make wise decisions as to how to proceed.
— Steven Sample, The Contrarian’s Guide to Leadership

Probabilistic Thinking

Think how likely a consequence happens in the light of other reasoning mental models.

How do we learn to make better decisions? In part, by training ourselves to think probabilistically. To do that, we must force ourselves to envision various futures—to hold contradictory scenarios in our minds simultaneously—and then expose ourselves to a wide spectrum of successes and failures to develop an intuition about which forecasts are more or less likely to come true.
— Charles Duhigg, Smarter Faster Better: The Secrets of Being Productive

Finance and Growth

Opportunity Cost

Choose the option that makes the least OC (Opportunity Cost = Returns On Best Foregone Option − Returns On Chosen Option).

There is an opportunity cost for everything we do. This is why we must have the awareness to ensure that what we are pursuing is really what we value because the pursuit leaves countless lost opportunities in its wake. We choose one experience at the sacrifice of all other experiences.
— Chris Matakas

Margin Of Safety

Allow a margin of safety or room for not being knocked down completely when trying anything.

When you build a bridge, you insist that it can carry 30,000 pounds, but you only drive 10,000 pound trucks across it. You require a margin of safety, and rightly so.
— Warren Buffet

Diminishing Returns

Be aware that continued effort can be diminished in performance after an optimal level.

As long as my heart’s still in it, I’ll keep going. If the passion’s there, why stop?… There’ll likely be a point of diminishing returns, a point where my strength will begin to wane. Until then, I’ll just keep plodding onward, putting one foot in front of the other to the best of my ability. Smiling the entire time.
— Dean Karnazes

Loss Aversion

Be aware of your tendency to respond more strongly to losses than to gains.

One reason is that we let our fears fester and grow, unchallenged, in our heads. We don’t examine them in the cold light of day and see what they’re made of. Another reason is that we are loss averse. We feel the pain of loss much more than the pleasure of gain. We pay greater attention to potential losses than gains, and we’re inclined to avoid possible setbacks more than we are to seek potential wins.
— Diane Mulcahy, The Gig Economy

Sunk Cost Fallacy

Be aware of your tendency not to cut losses from an ineffective endeavour just because you invested so many resources in it.

The sunk cost fallacy is most dangerous when we have invested a lot of time, money, energy, or love in something. This investment becomes a reason to carry on, even if we are dealing with a lost cause. The more we invest, the greater the sunk costs are, and the greater the urge to continue becomes.
— Rolf Dobelli, The Art of Thinking Clearly

Compounding

Remind yourself to check the key metrics regularly as they may be influenced by the compound effect – interest earns interest over time.

We encourage every startup to measure their progress by weekly growth rate. If you have 100 users, you need to get 10 more next week to grow 10% a week. And while 110 may not seem much better than 100, if you keep growing at 10% a week you’ll be surprised how big the numbers get. After a year you’ll have 14,000 users, and after 2 years you’ll have 2 million.
— Paul Graham, Do Things That Don’t Scale

Psychology for Marketing

Social Proof

Show your customers the proof of others buying your products, following your Twitter, etc., and they may join the crowd.

The principle of social proof says so: The greater the number of people who find any idea correct, the more the idea will be correct… We will use the actions of others to decide on proper behaviour for ourselves, especially when we view those others as similar to ourselves… When we are uncertain, we are willing to place an enormous amount of trust in the collective knowledge of the crowd.
— Robert B. Cialdini

Mere-exposure effect

Repeat the things that matter (e.g. messages, logo) as customers develop a preference for familiar things.

When the repeated words or pictures are shown so quickly that the observers never become aware of having seen them. They still end up liking the words or pictures that were presented more frequently. As should be clear by now, System 1 can respond to impressions of events of which System 2 is unaware. Indeed, the mere exposure effect is actually stronger for stimuli that the individual never consciously sees.
— Daniel Kahneman, Thinking, Fast and Slow

Halo effect

Make sure to leave good impressions (e.g. beautiful designs) across your touchpoints as an impression formed in one area influences opinions in other areas.

Beauty has a kind of blinding effect on our judgment. For instance, research shows we judge writing more favourably if we find the author attractive. This could be because of the halo effect we discussed earlier, where someone with one positive quality—beauty, in this case—is assumed also to have others. Or in some cases, people may rate beautiful people highly on other attributes just to curry favour with them.
— John Neffinger, Compelling People: The Hidden Qualities That Make Us Influential

Reciprocity

Always find ways to help your customers sincerely (e.g. free content, tools) as people usually respond to your kind action with another kind of action.

The law of reciprocity: The person who gives first is usually the one who ends up with the most.
—Blair Singer