By adding concepts to what Charlie Munger calls his "mental model" collection, one can take advantage of them (or guard against them) throughout life.
Satisficing: A psychological and economic phenomenon that results from consumers choosing a product that meets criteria at an adequate level, rather than expending a great deal more time to find a fully optimal solution.
Put another way, people are not looking for optimal solutions in their life. They are looking for a combination of “just good enough” or “better than average” weighted by the total effort or cost expenditure necessary to acquire said solution. People don’t want a better mouse trap, they want a mouse trap that works at the lowest price or effort.
This ties in with our mental models related to brands and marketing: For those who lack knowledge of a specific industry, such as fine watches or cars, brand names serve as a proxy to communicate information and serve as a type of insurance against making both errors of omission and commission. If one wants a fine watch and knows nothing about the industry, it is a fair bet that a Rolex is going to be wildly known, respected, and live up to its reputation. The newly wealthy, for example, would not be aware of brands such as A. Lange & Söhne. Likewise, a doctor who wants a good piano isn’t going to be able to tell the difference in touch and action from a row of piano brands so purchasing a Steinway & Sons is going to suffice for his needs, ensuring that he will be respected and get quality for his piano choice. Even though additional research could provide better savings or an even better brand of piano, satisficing results in him saying, “I want to be done with it and this works.” (more…)
