From all walks of life, we conduct by making decisions, small and big. From your decision to read this newsletter to every other action you made or about to make, is a decision before acting. Your plan of action for the next hour, what to cook for dinner tonight, buying clothes or groceries, purchasing a car, mulling over a promotion, changing jobs, planning a vacation, booking a hotel stay, dating, choosing a partner, school for your kids and a movie to watch, everything is acquiring information, processing it, decision making, and action. We observe and extract information from the world around us, fit the relevant data into our mental framework, interpret it and make a decision. Unaware, we have been using many mental models throughout our lives: some good, some bad. A mental framework is to mind as the software is to a computer. Good mental models are just good software in mind or a good tool; like knowing to use a hammer, but not your hand to drive a nail into the wall.
N number of mental models exist across disciplines, some are domain-specific, some are widely applicable, but we require only a handful of them in our daily lives. For example, the opportunity cost is a mental model from microeconomics, but you can use it to decide if you want to fuel your car for a lower price by driving five extra miles and lose time or fuel at a nearby gas station for few extra bucks. Critical mass is a mental model from physics, but you can use it to find how many friends you should convince before that travel plan in your mind can take off. The other day I bought myself a ton of tea from the market, which I thought would taste amazing. I returned home, brewed a cup, and found out that it tasted terrible. What I experienced was a sunken cost dilemma. Should I drink the rest of the tea that tastes terrible because I already paid enough dough, or buy another. This is Sunken cost fallacy/Concorde fallacy from behavioural economics. Mental models are not exclusively for entrepreneurs or businesses. An average person like me can tap into a super thinking mind for better life decisions every day using mental models.
We can’t always be right, but we can fare better in our lives by being wrong less, which itself is a mental model called inverse thinking. The inverse of being right more is being wrong less.
Welcome to Mental Model Series. More about mental models in the following posts as a part of this series
