Mental Models: The Complete List

This is a list of mental models I find repeatedly useful.

According to billionaire investor Charlie Munger,

“80 or 90 important models will carry about 90% of the freight in making you a worldly-wise person. And, of those, only a mere handful really carry very heavy freight.”

Before the list, a quick look at mental models and why they matter.

What is a Mental Model?

Put simply, a mental model is a tool to help us understand the world.

The world is too complex for our brains to deal with. Every second, we are bombarded with millions of bits of information in the form of sights, sounds, tastes and thoughts. We can’t process it all, so our brains simplify. Some of this happens automatically, some of it can be trained.

Humans aren’t perfect. When we simplify, we take shortcuts. These shortcuts lead to mistakes.

It isn’t hard to imagine how these mistakes can cause problems. You might blow your life savings on something you don’t understand. You might say something you don’t mean and ruin a relationship.

Mental models help calibrate us to reality. By assembling different ways of looking at the world, we are less likely to get stuck in a single form of biased thinking. By understanding the ways people make mistakes, we can use that knowledge to make fewer mistakes ourselves.

It’s no wonder Charlies Munger calls mental models the key to “elementary, worldly wisdom”.

How to Use This List

Just skimming through this list won’t do you much good.

To get the real benefit of mental models, they must become a part of you. That happens through practice—you must use these models on a daily or near-daily basis.

Use the points in this list as a jumping point for your own research.

Note: This list is, and always will be, a work in progress. If something is missing on incorrect, please contact me at: charles {at} marketmeditations {dot} com.

Mental Models from Mathematics

General Mathematics

  • Basic Algebra.
  • Extrapolation.

Elementary Probability & Statistics

Related Reading: How to Lie With Statistics, Fooled by Randomness.

  • Power laws. Winner-take-all effects. A few books will make up 80% of the sales in a year. A few people own 80% of the wealth in the world. (Related: Pareto principle, 80-20 rule, long tail)
  • Normal distribution. (Related: standard deviation)
  • Fat-tailed distributions. 
  • Correlation vs causation. Overweight people seem to eat more meat. Does that mean meat causes obesity?
  • Reversion to the mean. 
  • Outliers.
  • Bayes rule.

Accounting and Finance

  • Compound Interest.
  • Depreciation. 
  • Interest.

Mental Models From Hard Sciences

Models from physics, chemistry and engineering.

  • Autocatalysis. Munger: “If you get a certain kind of process going in chemistry, it speeds up on its own. So you get this marvelous boost in what you’re trying to do that runs on and on. Now, the laws of physics are such that it doesn’t run on forever. […] You accomplish A—and, all of a sudden, you’re getting A + B + C for a while.” (Related: momentum, inertia, critical mass )
  • Activation energy. The minimum amount of energy you need to start a reaction. Useful for thinking about startup costs in business, jumpstarting behavioral change, going viral on the internet, etc. (Related: MED, critical mass)
  • Half life. The time it takes for a value to reach half of it’s original.
  • Equilibrium.
  • Backup system. Insurance. Generators. 
  • Breakpoints.
  • Heisenberg Uncertainty Principle.
  • Feedback loops.

Mental Models From Biology and Physiology

  • Hormesis. Nothing is inherently bad or good. In small enough doses, something “toxic” is actually beneficial. Examples include exercise, vegetables, alcohol, radiation, etc. (Related: antifragility)
  • Supercompensation. Periods of stress followed by rest can accelerate growth. (Related: progressive overload, post-traumatic growth)
  • Homeostasis. (Related: set point)
  • Evolution. (Related: competition, creative destruction)
  • Atrophy. Use it or lose it. (Related: memory, generation effect, aging)
  • Acute vs chronic stressors.

Mental Models from Psychology

These are mental models for the psychology of individuals.

Charlie Munger:

“The psychology of misjudgment is a terribly important thing to learn. **There are about 20 little principles.** And they interact, so it gets slightly complicated. But the guts of it is unbelievably important.”

How the Mind Works

  • The elephant and the rider.


In his book Influence, Robert Cialdini has 6 main ways that our psychology is influenced.

  • Reciprocation.“You scratch my back, I scratch yours.” Tit for tat. If someone feels like you’ve done them a favor, they get the urge to pay you back.
  • Commitment and consistency. “That’s just not who I am.” People want to look like they are consistent in their actions and choices. They also like to see this in other people. (Related: confirmation bias, sunken cost fallacy, choice-supportive bias)
  • Social proof. Monkey see, monkey do. Keeping up with a Joneses. “But all my friends are doing it.” People will do what people around them are doing.
  • Liking. “But he told me he loved me.” It is easier to manipulate or convince somebody if they like you first.
  • Authority. “A Harvard PhD said it, so it must be true.” We may blindly follow authority figures without thinking for ourselves. (Examples: holocaust, Milgram experiment)
  • Scarcity.“On sale for the next 24 hours!” We value scarce things more. Examples: banned books, limited edition items, 24 hour sales, etc.

Other models:

  • Overconfidence effect. 93% of drivers think they are better than average. We believe we are better than we actually are.
  • Availability heuristic. “I am more likely to die from a terrorist attack than a car accident”  The more easily we imagine or remember something, the higher we will value its importance. This makes us biased to sensationalism and recent news. (Related: Illusion-of-truth effect)
  • Survivorship bias. “He made a lot of money, so he must be doing something right.” 
  • Sunken cost fallacy. “But baby, we’ve come so far already.”
  • Temporal discounting.
  • Anchoring
  • Bias blind spot.
  • Confirmation bias. “I spent all day on Google trying to prove my point.”
  • Fundamental attribution error.
  • Projection bias.
  • Representativeness.
  • Hindsight bias. “I knew it all along”

Logical Fallacies

  • Ad hominem. “John says one plus one equals three.” “Well, John is wrong because he’s an asshole.”
  • Ad ignorantiam. (Argument from ignorance) “Nobody can explain that light strange light in the sky! It MUST be a UFO!” The belief that something is true because there isn’t evidence proving it to be false.
  • Argument from authority. “Well, Professor X has a PhD, so he’s right and you’re wrong.”
  • Argument from final consequences. 
  • Argument from personal incredulity.
  • Begging the question. “Have you stopped beating your wife yet?” The question makes an assumption. 
  • Circular reasoning.
  • Straw man.
  • Post-hoc ergo propter hoc. “I was sick. I took medicine and got better. Therefore, the medicine made me better.” “I was sick. I ate some jelly beans and got better. Therefore, the jellybeans made me better.” Just because A comes before B does not mean A caused B.


Mental Models From Philosophy

  • Precautionary Principle.
  • Paradigm shift.
  • Skin in the game.
  • Optionality.
  • The expert problem.
  • Logical positivism.

Mental Models From Management

Mental Models From Business

  • Blue ocean vs. red ocean.
  • Disruptive technologies.
  • Reverse engineering.
  • MVP.
  • Agile development.

Mental Models From Science

  • Falsifiability. Statements that can be proven false called “falsifiable”. Only these statements can be considered scientific. Note: This is the OPPOSITE of what we learn in school. (Related: Karl Popper, demarcation problem)

Mental Models From Economics

  • Opportunity cost.
  • Arbitrage.
  • Supply and demand.
  • Comparative advantage.
  • Zero sum.

Behavioral Economics

  • Groupthink.
  • Economies of scale.
  • Diseconomies of scale.

Dealing With Uncertainty

  • The Lucretius Problem

Mental Models From Complex Systems

  • The Minority Rule. “All it takes is a small number of intolerant virtuous people with skin in the game, in the form of courage, for society to function properly.” Examples include halal or organic food, Christianity, language, etc.
  • Emergence. Molecules are not alive but organisms are. In complex systems, bigger parts can take on traits that the smaller parts don’t have.
  • Spontaneous order. Nobody tells my local coffee shop how many donuts to stock in the morning. Complex systems to take on structure without top-down central planning. Examples: markets, cities, anarchy, etc.
  • Wisdom of the crowd. The collected judgments of a group can be more accurate than the judgment of an individual.
  • Second order effects.
  • Butterfly effect.

Other Mental Models

  • Misinterpretation of p-values.
  • Misunderstanding of randomness.
  • Curse of knowledge.
  • Ludic fallacy.
  • Lucifer effect.
  • Porter’s five forces analysis.
  • Top down vs bottom up.


Why I’m Taking a 90% Pay Cut to Write Full-Time

Today, I’m really scared.

It’s January 1, 2017. Today, I made a big decision. For the next year of my life, I’m taking a 90% pay cut to make it as a full-time writer.

First, some background.

Three days ago, I got a message from Benjamin Hardy, one of the top writers on Medium and contributor to Time:

Screen Shot 2017-01-01 at 1.21.00 PM.png

I didn’t know what to think. After all, I’ve only been publishing for a few short months. Suddenly, one of the most successful guys in the business is telling me that I am going to blow up in 2017!

The very next day, I get an email from Chad Grills, editor of The Mission—one of the top 3 publications on Medium, with over 200,000 regular readers:

I saw my friend recommend your latest piece on Asimov… it’s epic!  If you’d ever like to submit your work, I’d be honored to help promote it.

That’s when it hit me—people like what I write.

Why I Write

Writing is a thankless activity.

Just over three months ago, this blog didn’t exist. Yet, since I started, my writing has gone on to reach millions of people.

The secret to my success? I worked my ass off. In these 3 months, I’ve invested over 700 hours into blogging and writing. As a freelancer, 700 hours would have earned me over $30,000 dollars. As a writer, I didn’t even make $300.

I’m happy to take this pay cut. I want to to take this pay cut.


Because I believe in the power of ideas.

The Power of An Idea

In my lifetime, I’ve had exactly three life-changing moments.

I don’t mean life-changing like a new home or a new job. I mean life-changing like the world flips upside down, dumps you on your face and then kicks you while you’re down for extra effect.

One of the three was when my girlfriend—the girl I was going to marry—left me for a one-way ticket to South Korea. I didn’t see it coming at all. That event made me re-evaluate everything I thought I knew about the world.

The other two moments weren’t events at all. They were ideas.

Those two ideas were the reason I decided to quit my 9-5 to become a freelancer. I wanted challenges. I wanted to suffer. I wanted to exist.

Now, two years later, those same ideas are the reason I’m quitting freelancing, taking a 90% pay cut, and becoming a full-time writer.

Without those ideas, I would be a completely different person today. I know exactly how a single idea can completely change someone’s life.

Now I want to share that with other people.

Help Make the Dream Happen

Writing doesn’t pay. That’s okay—I don’t care about money. Last year, I spent less than $15,000 and still managed to launch a blog and travel to 6 different countries.

I want to write because it’s the best way I know to help a lot of people.

With that said, I can’t run a blog on passion alone. It takes 250+ hours of my time and hundreds of dollars each month to keep the blog running. If I want to do this seriously, the blog has to be sustainable.

That’s where YOU come in.

Currently, I have 3 months of savings in the bank. In that time, the blog needs to become sustainable.

There are two ways this can happen:

  1. I drown the blog in ads and products that you don’t need to try and keep the blog afloat.
  2. Readers provide support and, in exchange, I have more time to produce valuable content that improves people’s lives.

I really, really, really don’t want to take the first option.

That’s why I’ve launched a campaign on Patreon. Patreon lets readers provide DIRECT support so I can spend less time trying to sell you stuff you don’t need and more time creating content that improves people’s lives.

A small investment of your time (in the form of a pledge) will let me reach thousands of extra people each month.

In exchange for your support, you’ll get access to unique bonuses such as patron-only content, postcards, books I’ve read and other esoteric goodies.

PLUS, you’ll get the gift of my eternal gratitude. Who can put a price on that?

You can become a patron here.

Thank you for reading,


Shitty Days and How to Win Them

Today was a shitty day.

I spent half my afternoon staring at a computer screen. The other half of the afternoon was spent feeling sorry about the first half.

The result? A grand total of 0 words written.

It didn’t stop there, of course. To celebrate my grand failure, I drank a latte, ate half a pound of sweet potato, and spent the evening vegetating in a food coma.

Shit happens.

I have a reputation for being in control. It’s not true. In the past, a day like this would trigger a downward spiral of binge eating and self-hate. One bad decision would turn into two, which would turn into four…and on and on. It would take me months to get out.

That doesn’t happen anymore. Nowadays, I can be back at cruising velocity in a few days.

Beating shitty days comes down to two things, really:

  • Mental toughness (a learnable skill)
  • Specific techniques (a learnable skill)

I’m still feeling shitty right now. I didn’t want to write this. I wanted to stay at home and feel sorry for myself.

But I know how to get myself out.

Here’s how.

1. Recognize it’s a shitty day

Don’t laugh. This is important.

The worst mistake I’ve made in the past is holding shitty days to the standard of ordinary. These types of days are a different beast. They deserve special treatment.

If you want something lame but surprisingly effective, try saying, “Today is a shitty day” out loud. I did this about 15 times a few minutes ago. I feel a lot better.

Whatever works, right?

Put down your ego. If it’s a shitty day, accept it. That’s the first step.

2. Reach out for help

Before, whenever I had a shitty day, I would try to do things on my own. Nowadays, the first thing I do is message one or two good friends to ask for help.

Again, put down your ego here. You’re compromised—you had a bad day because you are NOT in control. This is the ideal time to ask for help.

Plus, It’s not a burden to friends, it’s a favor. If a good friend is having a hard time, I would be insulted if they didn’t ask me for help.

Today, so I sent a message to two good friends.

Message to Female Friend (we met earlier this morning):

Sorry to be awkward today, I’m not doing too well, actually.

Message to Male Friend:

I just spent all afternoon watching stupid videos, and now I’m depressed, haha.

Nothing fancy, but it doesn’t need to be. Just let them know you’re struggling. Here were their responses…

Female Friend:

If it’s about writing, just sit down and write like you always do!

Male Friend:

That occasional binge does a lot of mental harm, but in all reality the damage is minimal. […] It’s normal to slide back and forth, as long as the moving average is up.

The answers you’ll get might be “obvious” things that you know already. But that’s not the point. The point is to realize you aren’t alone… Again, this is under appreciated.

2. Drastically lower standards

Shitty days come from not feeling in control.

Let’s say you ate eleven chocolate croissants in the morning. Your diet is ruined. Life sucks. What’s the point of going to the gym anymore? Now you just want to curl into a ball and eat eleven more croissants…

With this kind of negative momentum, doing anything positive is a huge win.

Do you normally deadlift 400 pounds for 5 reps? Drastically lower standards. Just do 1 rep instead.

Do you normally write 2000 words a day? Drastically lower standards. Write 200 words instead. Is that too hard? No problem. Just write 20.

Do anything you can to make the first step happen.

I didn’t want to write today. I wanted to eat a giant plate of mango sticky rice and then stare at my bedroom ceiling all night.

Yet, here I am. Here’s what saved me: I said to myself, “Just write 500 shitty words. Your readers will forgive you.”

That was it. I messaged my friends and drastically lowered my standards. I sat down, took out my laptop, and started typing.

Now that I’m writing, it doesn’t seem so hard anymore. I’m well past the 500-word mark, and I could write a few thousand more.

3. Ride the momentum

Savvy readers might have noticed that all of the above steps have a single goal in mind—momentum.

Yes, one bad decision can cascade into two and four and eight and on and on. But so can good decisions.

Do whatever it takes to get the ball rolling. The rest is easy.

Less than an hour ago, I said to myself, “Just 500 shitty words.” Now I’m all finished, and I think I’ll go to the gym too.

Maybe it wasn’t such a shitty day after all.


Photo Credit: Wikimedia Commons

Isaac Asimov: How to Defeat Writer’s Block

If there’s one word to describe Isaac Asimov, it’s “prolific”.

To match the number of novels, letters, essays and other scribblings that Isaac produced in his lifetime, you would need to write at the pace of one full-length novel every two weeks for 25 years.

For Isaac Asimov, writer’s block was simply not an option.

As a semi-regular writer, I often find myself stuck frozen-fingered in front of an empty page. Looking for wisdom on the matter, I turned to Asimov’s autobiography, It’s Been a Good Life.

I wasn’t disappointed with what I found.

Let’s take a look…

1. Accept That Writing is Hard

A struggling writer once asked Isaac Asimov, “Where do you get your ideas?”

Isaac responded—

“By thinking and thinking and thinking till I’m ready to kill myself. […] Did you ever think it was easy to get a good idea?”

Aha. It’s not just flashes of insight on demand, not even for the great Isaac Asimov. Like every other writer, he struggled to have good ideas.

And the struggle was worth every moment—

I couldn’t sleep last night so I lay awake thinking of an article to write and I’d think and think and cry at the sad parts. I had a wonderful night.

Hey, nobody said conquering writer’s block was going to be easy.

2. Recognize You Are Stuck

Sometimes, the words just won’t come out. It happens to everyone—even Isaac Asimov:

Frequently, when I am at work on a science-fiction novel, I find myself heartily sick of it and unable to write another word.

We all get stuck. That’s not something you can control.

It’s what happens next, your reaction, that makes all the difference.

What does Asimov do?

3. Let Your Mind Fill Up Again

I don’t stare at blank sheets of paper. I don’t spend days and nights cudgeling a head that is empty of ideas. Instead, I simply leave the novel and go on to any of the dozen other projects that are on tap. I write an editorial, or an essay, or a short story, or work on one of my nonfiction books. By the time I’ve grown tired of these things, my mind has been able to do its proper work and fill up again. I return to my novel and find myself able to write easily once more.

That’s so powerful…

Here it is again:

  • Put down whatever you are working on
  • Go work on other projects (until they make you sick)
  • Return to find your mind filled with ideas again

Don’t fight the block. Give it space to breathe. Come back to it later, and you may find that it is no longer there.

4. The Secret Sauce

There’s something more behind all the techniques. This is the real reason Isaac was able to show up day after day and write over 200 books in his lifetime—

What I decided was that I wasn’t writing ten times as many books in order to get ten times the monetary returns, but in order to have ten times the pleasure.

Don’t be in it for the money, do it for love.


Photo credit: Thierry Ehrmann

How I Rebuilt Myself

I hadn’t showered in weeks.

I sat on the floor. Or, what remained of the floor. Most of it was buried in old McDonald’s nugget packaging and unfinished homework. My room smelled of mold. Hell, I smelled of mold.

But I noticed none of that.

My eyes were on the screen, as they had been for the last 16 hours. I was playing League of Legends—an online game where teams of animated characters fight to destroy the enemy’s base. My character was a girl. She was cute and played music on a keyboard. Maybe I’d marry someone like her.

I was an addict. Each day, I would wake at noon, skip class and play until I couldn’t keep my eyes open. I survived on McNuggets and six-dollar burritos from the joint next door.

I had no future. I was a loser. But I couldn’t stop. It was too much ‘fun’…

That was college. Somehow, I managed to graduate. My test-taking skills saved me. I got a job. Somebody hired me.

That changed nothing.

Life Pulled the Plug

In a different life, maybe nothing would have changed. I would have kept my head in the sand.

But life pulled the plug on me.

I don’t know what the trigger was. Maybe it was my induction into “adulthood”. Maybe it was the loneliness. Maybe it was looking into the eyes of people at work…and seeing nothing.

It was a mid-life crisis. I was 21.

Yea, sure, I was pampered and privileged and my parents paid for my education… but it didn’t feel like that.

The fear seized me. It wasn’t the in-your-face kind of fear you get when you see a snake in your driveway. It was softer, deeper and always there. It was the “trapped in outer space and running out of oxygen” kind of fear.

I was suffocating. There was nobody to talk too. I had no friends. My parents wouldn’t understand.

Anything but that.

I’d been hiding the doubt on a corner shelf for the past two decades and now the shelf was broken and all of it fell down and hit me on the head.

It was a strange terror of not meaning, not doing, not living… Anything was better than that.

So I tried.

I looked at myself. Maybe for the first time. I reached out for help. I started reading. I’d never had role models before. This time, I found them in books. I went to the gym. I stopped eating nuggets (but not burritos). I talked to strangers. Girls, even. I got rejected. It sucked.

But I kept trying.

I had relapses. I would fall back into a mess of self-hate. I binged on onion rings, called in sick to stay home and play card games, and dodged reality with poorly subtitled Korean soap operas.

But then, sure as sugar, the empty fear returned. Oh my god, it’s happening again. And there was nothing worse than that.

So, no matter the suck, I got out and started over.

Each time, I failed. Each time, things got a bit better. I could control my desires. I learned new skills. I found a little confidence.

Something interesting started to happen.

For the first time in my life, girls started to notice. Friends came to ask for advice. I got compliments on my dress, my intellect, my way of life… People started to use escape words: I was now “gifted”, “talented”, “smart” and “sociable”.

It was all a lie. I knew who I was. I was a loser. Still, it was addicting.

The emptiness left. In its place was something else—something more addicting than any video game. I was high on momentum, high on growth and high on meaning.

And so it went. I fell over and got up again. Each time, I stood a little longer. I read more books. I started writing. I taught myself to program. I quit my job. I traveled.

These last two years were the best in my life.

Shit still happens. My girlfriend dumped me this year. I cried. I shaved my head. I got pissed off and threw my phone in a pond.

The itch comes back. Come on, let’s play. Just a little bit. Sometimes, I laugh it away. Other times, it gets me.

But, whatever happens, my old friend fear is there to catch me. He gives me a kick in the ass. And I’m back here going forward, climbing, getting better every day.

Here’s to the next two years being even better.


Photo credit: David Blackwell