🎯 Core Models 🎯

Core Models and Concepts

We all have learnings in our lives we consider more precious than others — explanations and predictions that endure and keep on giving, versus those that fade away. Our core models form the backbone of our thinking and decision-making throughout our lives; it’s our grab bag of problem solving tools — and we want to have a resilient Swiss Army Knife at the ready at all times. These mental models help us understand a complex world, and prepare for all the changes that are inevitably ahead.

This set of core models below is my personal “desert island” set of model thinking concepts. These are the ones I really wouldn’t want to be caught dead leaving the house without.

Once these are on lock, head over to the unabridged models section for more model thinking goodness!

ConceptDateFieldPersonDefinition
absolute value1806MathJean-Robert ArgandThe value of x, regardless of its sign (or, its distance from zero).
activation energy1889ChemistrySvante ArrheniusThe amount of energy required to get two or more compounds to react, in chemistry or physics.
adverse selection1860sMoney
"All the world's a stageβ€œ1599ArtsWilliam ShakespeareShakespearean metaphor likening culture to a theatrical performance: "And all the men and women merely players;They have their exits and their entrances ..."β€”William Shakespeare, As You Like It
annuity1970sMoneyA series of payments made at equal intervals.
antifragile2012MathNassim TalebThings that can benefit from disorder, and grow stronger amidst chaos.
antimatter1928PhysicsPaul Dirac
appreciationMoney
a prioriStrategy
arrow of time1927PhysicsArthur EddingtonTheory of physics stating an asymmetry of time -- that time has a one-way direction in which the entropy of the universe is only increasing.
assetMoney
asymptoteMath
availability bias1973PsychologyKahneman and Tversky
averageMath
bank reservesMoney
Base Rate FallacyPsychology
Bayes' Theorem1763MathReverend Thomas BayesA mathematical method of determining the updated probability of a certain event or case, given new information
Big Bang1949PhysicsFred Hoyle
black holesPhysicsStephen Hawking
Black Swan2007MathNassim Taleb
blockchainMoney
boiling frog syndromePsychology
bounded rationality
broken windows theoryPsychology
Butterfly Effect1963PhysicsEdward Lorenz
bystander effectPsychology
capital gainsMoney
carbon dating1940sPhysicsWillard LibbyA method of determining the age of an organic sample by radioactive decay.
carpe diemStrategy"Seize the day!"
catalystChemistry
cause and effect
caveat emptorStrategy
Central Limit Theorem1733MathAbraham de Moivre
ceteris paribusStrategy"all other things being equal"; holding the effects of other variables constant to determine the effects on a single variable of interest
Chesterton's Fence1929Strategy
chilling effect
compound interestMoney
Condorcet Jury Theorem1785MathMarquis de Condorcet
confirmation biasPsychology
consent of the governedPolitical philosophyConcept of political philosophy in which a government's legitimacy and right to use state power is only justified if consented to by the people over whom said power is wielded.
correlation is not causation
counterfactuals
creative destruction1942MoneyJoseph Shumpeter Economist Joseph Shumpeter's idea for how the business cycle works: by innovation disrupting established processes and industries and forcing change into markets, often destructively and swiftly
crossing the RubiconHistoryJulius CaesarMaking a decision from which there is no turning back; a reference to Julius Caesar's overthrow of the Roman republic to found the Roman Empire in 49 BCE
cryptocurrencyMoney
dark matterPhysics
dead hand of the pastPolitical philosophyThomas JeffersonProblem inherent in constitutional political philosophy, where eventually a people becomes ruled by "masters" no longer alive, who rule by "fiat" via a document, from beyond the grave.
decision treeStrategy
depreciationMoney
distributionMath
diversityStrategy
divident paymentsMoneyPeriodic, usually quarterly, payouts to stockholders of the company when posting profits. Along with capital gains, one of the 2 primary reasons to invest in stocks.
Doppler Effect1842PhysicsChristian Doppler
Drake Equation1961PhysicsFrank DrakeEstimation of the number of technological civilizations that might exist in the universe.
Dunbar Number1990sRobin Dunbar
Dunning-Kruger EffectA cognitive bias in which people mistakenly assess their cognitive ability as higher than it actually is, because they cannot recognize their incompetence in comparison to others.
Duverger's Law1940sPolitical philosophyMaurice DuvergerHolds that plurality-rule elections within single member districts β€” such as the structure found in the U.S. β€” tend to favor two-party systems
edge case
equality under lawPolitical philosophyAn ancient principle of vital importance to almost every constitution in the world, stating that all people should be treated equally in the eyes of the law, and that all individuals are subject to the same set of laws
elasticityMoneyThe ability of pricing mechanisms to respond quickly or less quickly to changes in prevailing conditions
electromagnetic spectrumPhysics
emperor's new clothesStrategy
entropyPhysicsA scientific term, thermodynamic concept, and measurable physical property referring to the state of disorder, randomness, or uncertainty in a system or in nature
equilibriumScienceA resting condition all systems seek, in which all competing inflows and outflows are in balance.
event horizonPhysics
evolution
exit strategyStrategy
false negatives
false positives
falsifiabillity
fiduciary dutyEthics
fifth columnStrategyA group who unites in secret to undermine a larger group from within.
first mover advantageStrategy
force multiplierStrategy
fractals1975MathBenoit Mandelbrot
fractional lendingMoney
fundamental attribution error
general relativityPhysicsAlbert Einstein
general willPolitical philosophyJean-Jacques Rousseau
Golden MeanMathAristotleAristotelian theory of an ideal balance point between the many extremes we face in life; he advocated harmony between the various spheres of life for an experience of happiness
Golden RuleEthicsAncient"Do unto others, as you would have them do unto you" is the essence of this ancient wisdom, often used as a shorthand version of Jesus's core teaching.
Goldilocks Zone
gravityPhysics
Heisenberg Uncertainty PrinciplePhysics----- Heisenberg
heuristicsPsychologyMental shortcuts that we do as a matter of routine, especially when we're stressed or under other types of cognitive constraints.
inflation
inflection point
intellectual propertyMoneyIP
iron law of ligarchyPolitical philosophyPolitical theory positing that no matter how democratic a group may start out, over time it will develop into a bureaucracy ruled by a small handful
keystone
Laffer curveMoney
Law of Large Numbers1713MathJacob BernoulliAs the number of coin tosses approaches infinity, the number of heads encountered will converge on 0.5; helpful in calculations of probability.
least-barricaded gateStrategyLeon TrotskyMetaphor about how social revolutions can take hold more easily in already weakened societies.
length contractionPhysics
lifeboat ethicsEthics
limiting factorChemistry
long tailMath
loss aversionPsychology
Lost EinsteinsMoney
map is not the territoryMetaphorA phrase reminding us that our mental picture of a thing is not the same as the actual thing itself
margin of errorMath
Maslow's PyramidPsychology---- MaslowA hierarchy of needs, from basic biological functions all the way up to self-actualization
meanMathThe mathematical average of a set of numbers
medianMath
Median Voter Theorem
mens rea
Moore's Law
moral hazardMoney
Narcissus & EchoMetaphor
Nash EquilibriumMath
natural selectionBiologyCharles Darwin
negative interest ratesMoney
Newton's Laws of MotionPhysics1st, 2nd, and 3rd laws
normal distributionMath
null hypothesisScience
observer effectPhysics
Occam's RazorStrategy
oligarchy
opportunity costMoneyWhat you miss out on by using a resource in a certain way -- what you would have done with the resource otherwise; what alternative use you would have put it to.
outlierMath
paradoxMathA self-contradicting statement.
Pareto PrincipleMoney----- Pareto
path dependentMath
Pavlov's dogsPsychology
pearls before swineMetaphorThe sense of wasting one's efforts for people who don't really appreciate them
permutationsMath
Peter PrincipleManagementTheory that individuals within corporate and other organizational hierarchies will rise to the highest level at which they become incompetent in their job duties.
phase shiftPhysics
Plato's cavePhilosophyPlato
point of no returnStrategy
Polyanna PrinciplePsychologyTendency for people to remember pleasant events more accurately than unpleasant ones
Potemkin VillageMetaphor
Prisoner's DilemmaStrategy
probabilityMath
Procrustean BedStrategyProcrustesSynonymous with ruthlessly enforcing conformity, the phrase comes from a Greek tale of extreme "form fitting" on the part of Poseidon's son Procrustes, a robber who is said to have attacked victims by cutting off men's legs or stretching them on racks accordingly to fit an iron bed size.
proxy warStrategy
Pyrrhic VictoryStrategyA victory in which the costs of winning far outweigh the rewards
quantum physicsPhysics
quid pro quoStrategy
ReagonomicsMoney
reality testingPsychologyDiscerning the difference between inner and outer, and seeing events as they really are, and not just what we want them to be
received wisdomReligion
red shiftPhysics
redundancyStrategy
resilienceStrategyAbility to bounce back into shape after having been pressed or stretched; elasticity. The capacity to recover quickly.
ripple effect
riskMoney
root cause
Rosetta StoneMetaphor
roundingMath
rounding errorMath
rule of lawPolitical philosophy
SchrΓΆdinger's CatPhysics
selection biasPsychology
Single point of failure (SPoF)A part of a system that, when it fails, brings down the entire rest of the system or stops it from working properly.
singularityPhysics
six degrees of separationSocial psychology
skin in the gameEthics
social contractPolitical philosophyJean-Jacques Rousseau
social contractPolitical philosophyJohn Locke
Socratic methodPhilosophySocrates
special relativityPhysicsAlbert Einstein
speed of lightPhysicsApprox. 300 million meters per second
standard deviationMath
stare decisis"It has been decided" β€” terminology used by a judge or court to indicate that the matter before them has already been decided by a previous ruling.
state of naturePolitical philosophyThomas Hobbes
status quoThe way things currently are
Streisand EffectThe act of attracting lots of attention to something you had been trying hard to keep quiet
supply and demandMoney
sword of DamoclesMetaphor
tabula rasaStrategyblank slate
tilting at windmillsMetaphorMiguel de CervantesRefers to ineffectual activity undertaken strenuously and loudly.
time dilationPhysics
tipping pointMath
Tit-for-TatStrategy
too many cooks in the kitchenMetaphorA metaphor connoting that too many people are currently involved in the decision-making process
tragedy of the commonsMoneyA common economic problem in which a commonly-pooled (aka public) resource is overconsumed, but underinvested in.
trickle down economicsMoney
trolley problemEthics
turtles all the way down
twin paradoxPhysicsAlbert Einstein
tyranny of choiceMoneyThe paradoxical effect that having too many options to choose from actually decreases the likelihoof of being able to reach a decision at all.
usuryMoney
variance
veil of ignorance1971Political philosophyJohn Rawls
Venn diagramMath
vulnerabilityPsychologyBrene Brown
wave-particle dualityPhysics
wisdom of crowdsStrategyDerived from the Diversity Prediction Theorem: the average prediction of a group of individuals will be more accurate than the prediction of one average member
wolves and sheepStrategy
worst case scenarioStrategy
zero sum gameStrategy