In all human systems and most complex systems, the second layer of effects often dwarfs the first layer, yet often goes unconsidered. In other words, we must consider that effects have effects. Second-order thinking is best illustrated by the idea of standing
Named after the friar William of Ockham, Occam’s Razor is a heuristic by which we select among competing explanations. Ockham stated that we should prefer the simplest explanation with the least moving parts: it is easier to falsify (see: Falsification), easier to
"What a man wishes, he also believes. Similarly, what we believe is what we choose to see. This is commonly referred to as the confirmation bias. It is a deeply ingrained mental habit, both energy-conserving and comfortable, to look for confirmations of
An idea introduced by Warren Buffett and Charles Munger in relation to investing: each individual tends to have an area or areas in which they really, truly know their stuff, their area of special competence. Areas not inside that circle are problematic
"Otherwise known as thinking through a situation in reverse or thinking “backwards,” inversion is a problem-solving technique. Often by considering what we want to avoid rather than what we want to get, we come up with better solutions. Inversion works not just
“A first principle is a basic, foundational, self-evident proposition or assumption that cannot be deduced from any other proposition or assumption.” (related: dimensionality reduction; orthogonality; “Reasonable minds can disagree” if underlying premises differ.) Source: Gabriel Weinberg's Mental Models I Find Repeatedly Useful
“A state of allocation of resources in which it is impossible to make any one individual better off without making at least one individual worse off…A Pareto improvement is defined to be a change to a different allocation that makes at least
“A systematic approach to estimating the strengths and weaknesses of alternatives that satisfy transactions, activities or functional requirements for a business.” (related: net present value — “a measurement of the profitability of an undertaking that is calculated by subtracting the present values
“The imitation of the operation of a real-world process or system over time.” (related: Queuing theory — “the mathematical study of waiting lines, or queues.”) Source: Gabriel Weinberg's Mental Models I Find Repeatedly Useful
“A very common continuous probability distribution…Physical quantities that are expected to be the sum of many independent processes (such as measurement errors) often have distributions that are nearly normal.” (related: central limit theorem) Source: Gabriel Weinberg's Mental Models I Find Repeatedly Useful