Psychology

One of the most powerful, and potentially harmful, mental models you will encounter in your life is known as the horns effect and halo effect.  It can cloud your judgment, and because it is closely related to the mere association mental model, has the power to cause you to make sub-standard decisions or hold irrational beliefs.  You must train yourself to actively fight against it.   What is the horns effect and halo effect?  It is a cognitive bias that causes you to allow one trait, either … [Read more...]

One of the things that has perplexed me for a long time is Charlie Munger's insistence that a significant minority of humanity is wired in such a way that they will steal if given the opportunity, regardless of whether or not they need the resources they are taking from another person.  Whether this is an adaptive evolutionary trait (which would make sense) or a byproduct of other mental models, he asserted that this known fact makes it important for the people designing society's systems to … [Read more...]

There is a quick test that can help you determine if you rely on intuition or reflective reasoning (intellect) when making decision.  Answer the following question as quickly as possible: "A bat and a ball cost $1.10 in total. The bat costs $1 more than the ball. How much does the ball cost?"  Do you have your answer?  Good.  Now I want you to think about it.  Commit to it.  Say your answer out loud.   If you are an intuitive thinker that relies on your gut feelings, it is highly … [Read more...]

Calibration errors are when people lack the genetic or cultural ability to calibrate communication based upon the situation, people involved, or other contextual clues.  To understand calibration errors as a mental model,  it might help to give you three real-world scenarios that would require the observer to calibrate the hyperbole. A group of frat boys lives together in a private fraternity.  On a Thursday night, one sent a text message to another that said, "I'm going to kill you."  … [Read more...]

Last month, I promised to pull more essays from my past out of the file cabinet.  This one dealt with motives and understanding how they influence human behavior.  This insight is one of the reasons I decided to avoid going to work on Wall Street after graduating from college and instead putting my higher goal - being near my family, setting up my own household with my spouse, and having large blocks of free time to pursue other passions no one knew about - ahead of my secondary goal - … [Read more...]