How some models intertwine and interact, in short part 2

This text is a second part of two-part text that shows how models interact and intertwine. It is a short education for the relationships of the models. This text helps you to edit your latticework of mental models when you read the text with deep thought. Be ready to disagree with me and discard any failed assumptions I might have. Enjoy the text

System structures like interconnections set out the paths of least resistance. For example, politicians do what they promise to people who finance them instead of what they promise to voters. Politicians cannot get elected without financiers, but voters matter less. Evolution is a complex adaptive system which corrects itself through the path of least resistance. The more competitive the field of expertise, the better systems you need to have an edge. Strategy is not only a system, its execution requires several of them.

Feedback loops work in increasing the odds of correct predictions. Successful predictions require continuous processes with balancing loops which produce additional information to improve last predictions. The evolution works through continuous feedback loops. During the lifetime of species, feedback loops must compound the best effects of genes first, and the worst effects last.

Understanding the daily cycle helps in motivating people. Motivation is strongest during the morning and fades toward the evening. Understanding cycles gives an edge in many fields of expertise. Most people have no clue about the existence of a long-term socioeconomic cycle, and they do not understand there are different seasons.

Better skills produce simplicity. Useless energy-consumption diminishes. Better skills help you produce faster reactions when they are necessary. Many skills have natural cycles. Understanding them accelerates learning. Which gives better odds to create an edge. Feedback loops in performing measurable skills work with adjusting your results of previous performance to next one.

Motivation or its absence are reactions to internal or external factors. It can compound after successful repetitions during the practice. Motivation has not only daily cycles, it fluctuates in shorter ones. When the edge becomes abundant, motivation to maintain it can disappear. Motivating is easier when you use psychological tendencies as leverages.

Deliberate practice requires simplicity of the process. It focuses on improving one thing at a time and discard others. Performer needs to a feedback loop between him and the skilled authority that helps him react to flaws in action sequences during practice. Deliberate practice requires a strategy for a long-term development of the performer.

Creating an edge requires a permutation of several factors including talent transferred through genes and most components of the deliberate practice. Edge does not create compounding effects unless people cannot notice the contrast between the skills of a performer with an edge and one without it.

Evolution is a chain reaction which has developed living beings throughout billions of years. It improves biological traits with a minuscule compounding rate. Cultural evolution requires a critical mass of people to develop their norms and actions with mutual understanding. Most psychological biases are the products of slowly developing brains and faster developing environments.

Figuring out opportunity costs of each added option after their optimal number compounds the unwanted effects of the decision process. The same process requires skill when it bases on facts you cannot easily measure.

Working psychological tendencies are reactions to stimuli. They can create edges with skilled exploitation. You learn most of them from authority figures who provide them on purpose or accidentally from random stimuli. Skilled execution of a strategy requires understanding psychological tendencies of each stakeholder.

Excessive self-regard is one of the most common reasons you lose an edge. You forget to be humble and become overconfident about your skills compared to other people. The greater the edge becomes, the higher the odds that your ego grows too much. It is also one of the most common weaknesses smart people have.

The availability of simplified actions others execute helps you to eliminate complexity. Availability of the skilled actions affects your chances to become more skilled during moments without practice. The availability of the reminders about weaknesses has to be minimal. You can improve the execution of a strategy by increasing its availability to all stakeholders.

Social groups work better when the roles in them are simple and clear. Social proof often compounds, but the rate variations are high. The rates increase when perceived authorities spread the message. Sometimes the scarcity of the message strengthens it. This happens when a tight group shares the common delusion and others are against it.

Persuasion professionals can increase need to reciprocate by increasing your path of least resistance by compounding the value of favors or gifts. The availability of other people reciprocating the favor you got, strengthens your need to do the same. When you choose from two similar authorities, your choice is one who did more favors or gave better gifts.

Authority positions imply edges, no matter whether they are real. They are often antifragile. When somebody attacks their credibility, their followers´ beliefs strengthen. Your mind can create a perception of you becoming an authority when excessive self-regard strengthens your beliefs after lots of effort to understand the topic. Authority figures in groups sometimes use invented antiauthorities to strengthen their ideology.

Scarcity of an edge offers leverage to increase its effectiveness. Scarcity is one of the strongest enemies of willpower. It destroys attention effectively. When you feel that the advice from the authority is scarce, it strengthens his status. Abundance of advice inverts the effect. The same effects apply to the scarcity and abundance of status symbols.

The contrast between the current path of least resistance and the preferable new one must often be big enough for recognition, but so small it requires minimal willpower. The contrast between authorities can make a difference in their believability. It increases the perception of importance of the stronger one and destroys the credibility of the weaker.

When your decision-making system confronts its limits and your brain loses willpower with too many decisions during the daily cycle, each added decision increases the odds of undesirable outcomes. The odds of good decisions grow when you use checklists as leverage in complex situations.

Successful strategy cannot produce too many irreversible reactions for stakeholders. Focus on your edges and weaknesses of opponents when you create a strategy for competitions. Strategies evolve when they confront obstacles in execution. Strategies need social proof and authority figures to maximize their effectiveness to stakeholders. Execution of a strategy improves when all stakeholders use the same checklists to apply shared tactics.

Checklists simplify the execution of complex actions. Their use requires willpower and rationality unless you program them to intuition. Checklist is seldom useful when a power-law event strikes. They are useful components of personal systems. Checklists have to be available to your senses and mind. Use contrast to make each item on the list more available.

Psychological tendencies (heuristics and biases)

Definitions

Psychological heuristics can be defined as ”Simple, efficient rules which people use to form judgments and make decisions.” Psychological biases can be defined as ”Systematic patterns of deviation from norm or rationality in judgment.” For the sake of keeping things simple, I will call heuristics and biases psychological tendencies

Your behavior is guided by the simple algorithms in your nerve cells

You will probably see yourself as a rational thinker who makes decisions after careful consideration. This is not an exact picture of reality. You have two sides, the emotional and the rational. Both sides need each other to work well. Most often they work the way they should. Sometimes, you are predictably irrational. When this happens, you are mostly using your emotional side. Your nerve cells have simple algorithms, that are guiding your behavior. These algorithms are simple instructions. They are either based on your genes or your experiences. Sometimes, you are manipulated by some people using these algorithms. Manipulation can be so subtle that you don´t even notice it. Subtle manipulations can have a compounding effect in which repetitive small changes create bigger results and irrationalities.

People have different reactions to different tendencies. They can be personal or cultural. Some people hate authorities and someone are infatuated in them. Asians are more interested in the collective good and people in Western countries are more individualists. You have to figure out yourself which tendencies have the biggest effect on you. A process of trial and error can be used. Gradual changes and reactions to them will eventually lead to right responses.

Tendencies are not best suited to modern environments

Environment changes fast compared to brains. Most tendencies have been developed through millennia. Emotions and instincts related to survival are the most common reasons for these tendencies. They save your energy. Especially, energy used by your brain. Their usefulness in modern environment is restricted. Most often, they lead you to the right direction, but sometimes they cause you misjudged decisions. Today, your survival is not at stake all the time. Tendencies that increased your chances of survival millenniums ago have more negative consequenses in modern environments. These tendencies lead to irrational decisions concerning on many other things than survival, for example, decisions about money.

You can also manipulate your own environment in a way that increases the usefulness of these tendencies. You can and you should help yourself to achieve success by using them to your own advantage. For example, you can create better habits by creating an environment in which there are many triggers that lead to good behavior. You can and you should also create an environment in which triggers for bad habits are unavailable or hard to detect. You cannot avoid all the negative effects in your life.

Experts have diagnosed more than hundred tendencies.

There are more than hundred different tendencies diagnosed by the experts in different branches of psychology. Most of them are just special cases. Learning all the special tendencies in certain cases is useless. There is a need to simplify things as far as possible. It is safe to say that understanding less than dozen tendencies and how they interact with each other is all you need to know about them. Most often, psychological research is concentrating on a single tendency. Most often, in real life situations, tendencies are not working alone. Thinking about a single tendency often leads to wrong conclusions. I have to say that, until now, it has been really hard to research many tendencies in the same time. As big data increases and artificial intelligence becomes smarter, it becomes easier to understand the effects of the combinations of tendencies. 

Many tendencies are the exact opposites. By understanding one, you understand the other. For example, liking and disliking tendencies can be put together. I have also tried to simplify and group many tendencies together. For example, egocentricity is consisted of loss aversion, endowment effect, confirmation and consistency biases, etc. Figuring out egocentricity helps you to understand all of them without remembering all of their names, definitions, or situations in which they have an effect on people. All this complexity becomes simpler and things start to make more sense. Here is the list of all the tendencies I will go through at some point. I have tried to put them in order, where the most important ones are first:

• Excessive self regard (egocentricity)
• Availability 
• Associations
• Social proof
• Scarcity/Abundance
• Authority misinfluence
• Contrast misreaction

All these tendencies can and will be used against you, either you do it yourself, or someone else does it. You should use them only to your own and common good. Using them for others will eventually backfire. Even the awareness of these tendencies, diminishes their negative effects. And hopefully will create positive influence.

Sources:

The Art of Thinking Clearly, Rolf Dobelli

Thinking Fast and Slow, Daniel Kahneman

Poor Charlie´s Almanack, Peter Kaufman

Have a nice end of the week

-TT

Introduction to a latticework of mental models and the blog

”Knowledge is not the personal property of its discoverer, but the common property of all”

-Benjamin Franklin

I have been a fool for most of my life. I stumbled upon the mental models by accident. I was studying the best investors of all time. And I found Charlie Munger and his idea about the latticework of mental models by trying to find how to make better investments. I consider the best way to learn, is to study the all-time greats in their own fields and their ideas. Munger is one of them. It took me a while to understand the concept of the latticework, but I have found it useful in my life. 

Most of the scientific breakthroughs have been only mental models before their discoveries have been proven

A mental model is an idea of how something works in the real world. Most of the scientific breakthroughs have been only mental descriptions before they have been proven. These descriptions of the basic laws of the universe are, in essence, the laws of thinking. They are the basics of the past, present, and future. Mental models are the simplified versions of the laws of the universe. The laws of the universe are too complex to be explained with enough precision by using the exact laws.

You need to know all the big ideas from multiple disciplines like mathematics, chemistry, physics, engineering, psychology, and economics, and use them routinely. You need to have models from different disciplines because all the wisdom cannot be found from one academic department. You need to identify core principles from every department and understand them. And understand how they relate to each other. You cannot just remember isolated facts and think you know everything. You don´t have enough brainpower. You need to create a latticework of mental models to understand how things are connected. The best models are the most basic scientific principles like inertia in physics or combinations in mathematics.

The amount of useful mental models is around a hundred. You will probably need a lot a smaller amount of models most of the time. The amount of the most important models is between twenty and thirty. You don´t have to understand all the models deeply, but you need to understand how they work at the basic level. You also need to think out of the disciplinary boundaries. You can only be a good thinker by forgetting them and by applying different mental models in many disciplines. For example, the mental model of cycles can be used in mathematics, physics, economics, and even in enhancing productivity or learning new skills. This flexibility makes most of the big ideas so powerful.

Using a latticework of mental models is a skill

Using mental models and connecting them with each other is a skill. And like learning other skills you need time and lots of repetition to truly master it. You have to learn the right things, in the right way, in the right order, and at the right time. I have spent two years and I have just started. There are no short-cuts. You need a critical mass of understanding to use mental models with their fullest potential. Constructing a latticework of mental models is a complex skill. The latticework is constructed from smaller sets of subskills. Understanding a single mental model is one subskill.

Some models intertwine with each other. You need to understand these connections thoroughly. Some people are more talented in learning to apply mental models in their daily lives. Others may need a lot more effort and time than others. And in like other skills, if you did learn to do things in the wrong way, you have to unlearn everything. The younger you start the easier learning is because your brain hasn´t strengthened the wrong connections.

This skill-based, learn the right things, in the right order approach, is what separates me from the others who blog about mental models. My problem is that nobody has done this before. I will probably make some mistakes about in which order these models should be taught. People are also different, which means the order introducing mental models my way, will not apply to everybody.

You have your mental models and some kind of latticework(s) working all the time

Everybody has their own mental models. We have tens of models. For example, what you think will happen to your iPhone if you drop it, is a mental model. How you think you will react is another one. The combination of the models can be a small part of latticework or they can just be separate models without connection in your head. You have your own models and I have only one question for you: Why wouldn´t you want to have better ones? I will show you what those models are and how you can use them to your advantage. You have to understand that no amount of information will guarantee an understanding and no amount of understanding will guarantee wisdom to use it properly. Reading and understanding are not enough without the proper utilization of the models.

The optimal latticework consists of the most basic scientific principles and the detailed models in your perspective field.

The optimal latticework consists of the most basic scientific principles of the most important disciplines and their interaction, and those principles should be connected to the expertise of your own detailed knowledge in the area of your own discipline. These two latticeworks combined as a bigger latticework will make you a truly world-class performer in an intellectual field instead of a fool with a fancy title. What sets expert performers from everyone else is the quality and quantity of their mental models.

My purpose is to give you some tools for creating a better latticework of the general principles and help you utilize it better. Your responsibility is to connect it with your discipline. You have to understand that no amount of information will guarantee an understanding and no amount of understanding will guarantee the wisdom to use it properly. This chain is what I call the utilization of data, and it will be the first model I will introduce. I will deliver you the information and the knowledge I have and you have to do the rest.

The three main benefits of learning the latticework of mental models with purest scientific principles:

• You will get a better general education.
• You will learn how to be more efficient and more productive.
• You will need to gather less information to get better results. Mental models make it possible to process large amounts of information quickly and you will need less experiential understanding.

You need to understand many factors and use many models at the same time.

We are at the beginning of the era, in which we can apply the results of modeling through multiple models and factors more accurately than before. This is necessary because big things great people do are never the results of a single factor. They happen, because of the interaction of many factors from genes to upbringing, from education to the concentration of hormones between individual brain cells. Thinking through multiple models and many factors at the same time is necessary, but rare. I read at least one non-fiction book a week to make my understanding of the latticework better. Most of the authors of the books think the factor they are promoting is the only factor for something happening. This leads to an incomplete understanding of the big picture and worse results in what people are trying to accomplish. With a lack of synthesis, you will end up like a man who sees every problem as a nail, because the only tool he has is a hammer.

We need to analyze the big data to get more accurate results of the research in psychology. Most of the studies are, for example, still made by researching one or two psychological biases at the same time. In reality, most of the time, the number of factors is not enough and the results we get are not truthful enough. We need more resources and the big data will help. It will take some time, but in the end, we will get there.

I will start with the most important models and how individuals can use them

In this blog, I will start with the most basic and most important models. They are also the highest quality models. I will introduce one model per week. The rest of the time is reserved for discussion. I will try to keep the models as simple as possible. First, I will introduce the most important models separately and some of their interactions with each other. The amount of the most basic and the most important models is somewhere between twenty and thirty. These models will give you most of the information you need about the latticework. Then I may get further into details with them before going into the less important models. This order may change, depending on how things move on.

Everything will be seen from the viewpoint of an individual, but most of the models can be applied to a larger group of people or even to the big organizations. Later on, it may change. I have already written a book about personal finance in Finnish, in which I use the latticework of mental models in developing better ways of using money or understanding the economy. I may write a better book about those things in English later, but I have not made any decisions about it.

I will try to keep the number of models as small as possible. Sometimes this is not as simple as I would like it to be. Because of the interaction of the models. For example, consistency bias and status quo bias in psychology can be seen as inertia in physics. The names I use may vary with names the other mental model's bloggers or experts use. I will try to use the terms of the most basic disciplines like mathematics, physics, or chemistry. For example, I will use Inertia instead of status quo bias as I try to keep things as simple as possible. There is no need to use both. If you really understand the models, there is no need to complicate things by increasing the amount of them.

At least 90% of the things I publish will be free

All these blog posts will be free. Unfortunately, everything has an opportunity cost. You have to be willing to believe you get enough added value from reading my blog to justify the cost of using the most valuable commodity of yours, time. You will never get it back. Feel free to share all the information in this blog with all the people you think will get added value from it. I will probably publish some books about mental models and those will probably not be free. Books have a better user interface than a blogger, which I am using.

Do you consider yourself as a helpful person?

Could you give me some advice by answering two questions:

On a scale from 1 to 10, how useful is this information to you?

Why didn´t you give a lower number?

I hope you find this information useful and want to improve your mental models with me!

-TT