Numeracy

"A Random Walk Down Wall Street, written by Burton Gordon Malkiel, a Princeton economist, is an influential book on the subject of stock markets which popularized the random walk hypothesis. Malkiel argues that asset prices typically exhibit signs of random walk and that one cannot consistently outperform market averages. The book is frequently cited by those in favor of the efficient-market hypothesis. As of 2015, there have been eleven editions and over 1.5 million copies sold."- Wikipedia

Scott Page Model Thinking MOOC Course

"Related to the Time Value of Shipping, the right investment decision changes based on the time period you are optimizing for. "Choosing to ask “How can we create the most impact in the next 3 months?” or “How can we create the most impact in the next 3 years?” will result in dramatically different decisions for your team. It follows then that aligning with your team and stakeholders about what time horizon to optimize for is often the first discussion to have." — Brandon Chu

Product Management Mental Models for Everyone

A market that tends towards one dominant player. (related: lock-in; monopoly; monopsony)

Gabriel Weinberg's Mental Models I Find Repeatedly Useful

1. Be self-reflective and make sure your people are self-reflective. 2. Know that nobody can see themselves objectively. 3. Teach and reinforce the merits of mistake-based learning.

Ray Dalio's Book Principles

Philosopher Daniel Dennett's Book Intuition Pumps

Natural selection is an automatic reason-finder; it “discovers” and “endorses” and “focuses” reasons over many generations. The reasons tracked by evolution I have called “free-floating rationales,” a term that has apparently jangled the nerves of more than a few thinkers, who suspect I am conjuring up ghosts of some sort, strange immaterial ideas that have no business appearing in a sober materialist’s account of reality. Not at all. Free-floating rationales are no more ghostly or problematic than numbers or centers of gravity. There were nine planets before people invented ways of articulating arithmetic, and asteroids had centers of gravity before there were physicists to dream up the idea and calculate with it. It is a mistake to confuse numbers with the numerals (Arabic or Roman or whatever) that we use as their names. Numerals are human inventions; numbers are not. Reasons, in the sense I am using the term, are like numbers, not numerals. We should all be happy to speak of the reasons uncovered by evolution before they were ever expressed or represented by human investigators or any other minds. Consider the strikingly similar constructions in the figures facing page 240.

Philosopher Daniel Dennett's Book Intuition Pumps

“A means of leaving one’s current situation, either after a predetermined objective has been achieved, or as a strategy to mitigate failure.”

Gabriel Weinberg's Mental Models I Find Repeatedly Useful

"Multiple-criteria decision-making (MCDM) or multiple-criteria decision analysis (MCDA) is a sub-discipline of operations research that explicitly evaluates multiple conflicting criteria in decision making (both in daily life and in settings such as business, government and medicine). Conflicting criteria are typical in evaluating options: cost or price is usually one of the main criteria, and some measure of quality is typically another criterion, easily in conflict with the cost. In purchasing a car, cost, comfort, safety, and fuel economy may be some of the main criteria we consider – it is unusual that the cheapest car is the most comfortable and the safest one. In portfolio management, we are interested in getting high returns but at the same time reducing our risks, but the stocks that have the potential of bringing high returns typically also carry high risks of losing money. In a service industry, customer satisfaction and the cost of providing service are fundamental conflicting criteria" - Wikipedia

Scott Page Model Thinking MOOC Course

Evolution by natural selection was once called “the greatest idea anyone ever had.” In the 19th century, Charles Darwin and Alfred Russel Wallace simultaneous realized that species evolve through random mutation and differential survival rates. If we call human intervention in animal-breeding an example of “artificial selection,” we can call Mother Nature deciding the success or failure of a particular mutation “natural selection.” Those best suited for survival tend to be preserved. But of course, conditions change. - Shane Parrish "Natural selection is the differential survival and reproduction of individuals due to differences in phenotype. It is a key mechanism of evolution, the change in heritable traits of a population over time. Charles Darwin popularised the term "natural selection", and compared it with artificial selection...Natural selection acts on the phenotype, or the observable characteristics of an organism, but the genetic (heritable) basis of any phenotype that gives a reproductive advantage may become more common in a population. Over time, this process can result in populations that specialise for particular ecological niches (microevolution) and may eventually result in speciation (the emergence of new species, macroevolution). In other words, natural selection is a key process in the evolution of a population. Natural selection can be contrasted with artificial selection, in which humans intentionally choose specific traits, whereas in natural selection there is no intentional choice." - Wikipedia (James Clear) “The differential survival and reproduction of individuals due to differences in phenotype. It is a key mechanism of evolution, the change in heritable traits of a population over time.” - Gabriel Weinberg

Shane Parrish's Farnam Street Mental Model Guide https://www.farnamstreetblog.com/mental-models/ --- James Clear Mental Models Overview https://jamesclear.com/mental-models --- Gabriel Weinberg's Mental Models I Find Repeatedly Useful https://medium.com/@yegg/mental-models-i-find-repeatedly-useful-936f1cc405d

An unconscious failure to look at past odds in determining current or future behavior.

Shane Parrish's Farnam Street Mental Model Guide

“A type of defensive tactic used by a corporation’s board of directors against a takeover. Typically, such a plan gives shareholders the right to buy more shares at a discount if one shareholder buys a certain percentage or more of the company’s shares.” (related: proxy fight).

Gabriel Weinberg's Mental Models I Find Repeatedly Useful

Often ignored in mainstream economics, the concept of bribery is central to human systems: Given the chance, it is often easier to pay a certain agent to look the other way than to follow the rules. The enforcer of the rules is then neutralized. This principle/agent problem can be seen as a form of arbitrage.

Shane Parrish's Farnam Street Mental Model Guide

“The costs associated with switching suppliers.”

Gabriel Weinberg's Mental Models I Find Repeatedly Useful

Your brain is importantly not in the same predicament you would be in, trapped in the control room. Its task is—must be—partly solved in advance by the way some inputs are “wired up” to some outputs so that there is some leverage in the brain with which to learn and refine further appropriate relationships. This is another way of dramatizing the widely recognized claim that our brains are not “blank slates” at birth (Pinker, 2002), but are already designed by natural selection to embody various preferences, anticipations, and associations. And as long as some of the appropriate connections are built in, they don’t have to be labeled. Before there can be comprehension, there has to be competence without comprehension. This is nature’s way

Philosopher Daniel Dennett's Book Intuition Pumps

"Homeostasis is the property of a system within an organism in which a variable, such as the concentration of a substance in solution, is actively regulated to remain very nearly constant. Examples of homeostasis include the regulation of body temperature, the pH of extracellular fluid, or the concentrations of sodium, potassium and calcium ions, as well as that of glucose in the blood plasma, despite changes in the environment, diet, or level of activity. Each of these variables is controlled by a separate regulator or homeostatic mechanism, which, together, maintain life. The concept was described by French physiologist Claude Bernard in 1865 and the word was coined by Walter Bradford Cannon in 1926." - Wikipedia

James Clear Mental Models Overview

“All the people/culture compromises made to ‘just get it done’ in the early stages of a startup.”

Gabriel Weinberg's Mental Models I Find Repeatedly Useful

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 because not only are we ignorant about them, but we may also be ignorant of our own ignorance. Thus, when we're making decisions, it becomes important to define and attend to our special circle, so as to act accordingly.

Shane Parrish's Farnam Street Mental Model Guide

Note even though all the robot’s intentional states and acts are derived from your purposes, they are beginning to become detached somewhat from your purposes. Since you designed the robot to “think for itself” to some degree, its “thinking” may escape your anticipated boundaries. For a real-world, nonfictional example of such an artifact, consider a chess-playing computer that can beat its creator at chess. It is true that the only reason we can say that the computer is currently “investigating” queen-side rook options and “deciding” not to castle is that it is an artifact designed by a human artificer to do just that sort of thing. We are artifacts, designed over the eons as survival machines for genes that cannot act swiftly and informedly in their own interests. Our interests as we conceive of them and the “interests” of our genes may well diverge—even though were it not for our genes’ “interests,” we would not exist. Their preservation is our original raison d ‘être, even if we can learn to ignore that goal and devise our own summum bonum, thanks to the intelligence, the capacity to learn, that our genes have installed in us. So our intentionality is derived from the intentionality of our “selfish” genes.

Philosopher Daniel Dennett's Book Intuition Pumps

"A cellular automaton (pl. cellular automata, abbrev. CA) is a discrete model studied in computability theory, mathematics, physics, complexity science, theoretical biology and microstructure modeling. Cellular automata are also called cellular spaces, tessellation automata, homogeneous structures, cellular structures, tessellation structures, and iterative arrays." Wikipedia

Scott Page Model Thinking MOOC Course

"A whole bunch of ways in which we can get cooperation [inaudible] dilemma. It can be repeated, direct reciprocity; it c ould be reputation, indirect reciprocity. >> Yeah. It can be a network effect. It can be group selection, where groups fight against each other, and so the groups that cooperate are likely to win. There can be kin selection, where what happens is that I cooperate with people who are like me. "- Transcript from Scott Page Coursera

Scott Page Model Thinking MOOC Course

1.Introversion vs. extroversion. 2. Intuiting vs. sensing. 3. Thinking vs. feeling. 4. Planning vs. perceiving. 5. Creators vs. refiners vs. advancers vs. executors vs. flexors. 6. Focusing on tasks vs. focusing on goals. 7. Workplace Personality Inventory. 8. Shapers are people who can go from visualization to actualization.

Ray Dalio's Book Principles

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 on your tiptoes at a parade: Once one person does it, everyone will do it in order to see, thus negating the first tiptoer. Now, however, the whole parade audience suffers on their toes rather than standing firmly on their whole feet.

Shane Parrish's Farnam Street Mental Model Guide

"Collective action refers to action taken together by a group of people whose goal is to enhance their status and achieve a common objective.[1] It is enacted by a representative of the group.[2] It is a term that has formulations and theories in many areas of the social sciences including psychology, sociology, anthropology, political science and economics." - Wikipedia

Scott Page Model Thinking MOOC Course

Ray Dalio's Book Principles

"In software development, a breakpoint is an intentional stopping or pausing place in a program, put in place for debugging purposes. It is also sometimes simply referred to as a pause." - Wikipedia "Farnam Street give a very good explaination of the nature of break point -- Multiplicative System. What’s 1,506,789 x 9,809 x 5.56 x 0? Hopefully you didn’t have to whip out the old TI-84 to solve that one. It’s a zero. and that zero, is our concept of break points. Break Point can be understand as Weakest Link in the multicaptive system, it could be place in the system intentionally, such as fuse in electrial circuits, or shar pins in boat propellers." - Rational Pov

James Clear Mental Models Overview

“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.”)

Gabriel Weinberg's Mental Models I Find Repeatedly Useful

"You will learn the most about the customer after you launch the product, don’t waste the opportunity to build on those learnings. Everything is a hypothesis until customers are using the product at scale. While what your team invests in “pre-launch learning” — the customer interviews, prototype testing, quantitative analysis, beta testing, etc. — can give you a massive leg up on the probability of being right, there are always behaviours and edge cases that emerge once you ship the feature to 100% of customers. As a percentage of customer insight learned, you will gain the majority of learning after launch. To not investing accordingly by iterating the product (sometimes drastically), doesn’t make sense with that in mind." — Brandon Chu

Product Management Mental Models for Everyone

Game theory describes situations of conflict, limited resources, and competition. Given a certain situation and a limited amount of resources and time, what decisions are competitors likely to make, and which should they make? One important note is that traditional game theory may describe humans as more rational than they really are. Game theory is theory, after all. - Shane Parrish Business - Economics: "Scarcity refers to the limited availability of a commodity, which may be in demand in the market. The concept of scarcity also includes an individual capacity to buy all or some of the commodities as per the available resources with that individual" - Wikipedia (James Clear)

Shane Parrish's Farnam Street Mental Model Guide https://www.farnamstreetblog.com/mental-models/ --- James Clear Mental Models Overview https://jamesclear.com/mental-models

"if we write down a Simple Model of Growth - Economic Growth that involves investing money in new machines. That there are limits to growth. That the model is going to max out at this point, when the number of machines lost to depreciation is exactly offset by the number of machines that we invested in the previous period. If we start with no machines, growth is going to happen really really fast initially, but then it's going to fall off when it reaches this equilibrium level. So to get sustained growth, that's going to require new technologies - new innovations. And that's where we are going next. We're going to construct Solow's Growth Model which includes this Innovation Parameter. " - Transcript from Scott Page Coursera

Scott Page Model Thinking MOOC Course

Ray Dalio's Book Principles

"A fire is not much more than a combination of carbon and oxygen, but the forests and coal mines of the world are not combusting at will because such a chemical reaction requires the input of a critical level of “activation energy” in order to get a reaction started. Two combustible elements alone are not enough." - Shane Parrish “The minimum energy which must be available to a chemical system with potential reactants to result in a chemical reaction.” - Gabriel Weinberg "In chemistry, activation energy is the energy which must be available to a chemical system with potential reactants to result in a chemical reaction.[1] Activation energy may also be defined as the minimum energy required to start a chemical reaction. The activation energy of a reaction is usually denoted by Ea and given in units of kilojoules per mole (kJ/mol) or kilocalories per mole (kcal/mol). Activation energy can be thought of as the height of the potential barrier (sometimes called the energy barrier) separating two minima of potential energy (of the reactants and products of a reaction). For a chemical reaction to proceed at a reasonable rate, there should exist an appreciable number of molecules with translational energy equal to or greater than the activation energy." - Wikipedia (James Clear )

Shane Parrish's Farnam Street Mental Model Guide https://www.farnamstreetblog.com/mental-models/ --- Gabriel Weinberg's Mental Models I Find Repeatedly Useful https://medium.com/@yegg/mental-models-i-find-repeatedly-useful-936f1cc405d" --- James Clear Mental Models Overview https://jamesclear.com/mental-models

The primatologist Robin Dunbar observed through study that the number of individuals a primate can get to know and trust closely is related to the size of its neocortex. Extrapolating from his study of primates, Dunbar theorized that the Dunbar number for a human being is somewhere in the 100–250 range, which is supported by certain studies of human behavior and social networks. - Shane Parrish Managing: “A suggested cognitive limit to the number of people with whom one can maintain stable social relationships..with a commonly used value of 150.” - Gabriel Weinberg

Shane Parrish's Farnam Street Mental Model Guide https://www.farnamstreetblog.com/mental-models/ --- Gabriel Weinberg's Mental Models I Find Repeatedly Useful https://medium.com/@yegg/mental-models-i-find-repeatedly-useful-936f1cc405d"

Species tend to adapt to their surroundings in order to survive, given the combination of their genetics and their environment – an always-unavoidable combination. However, adaptations made in an individual's lifetime are not passed down genetically, as was once thought: Populations of species adapt through the process of evolution by natural selection, as the most-fit examples of the species replicate at an above-average rate.

Shane Parrish's Farnam Street Mental Model Guide

"How do you draw the best possible line through the data? ... it's a lot of data out there. One thing you can do is you can fit that data to linear models. What linear models will do is they'll explain some percentage of the variation. Maybe a lot, maybe a little. These linear models will also tell us the sign and magnitude of coefficients. So it'll tell us whether a variable. It's got a positive effect but it's got a negative effect. And also tell a sort of how big that effect is, and that allows us to make policy choices. You know, investing in things like teacher quality as opposed to class size because they have a larger effect. This is what I call big coefficient thinking." - Transcript from Scott Page Coursera

Scott Page Model Thinking MOOC Course

A process can often look like a normal distribution but have a large “tail” – meaning that seemingly outlier events are far more likely than they are in an actual normal distribution. A strategy or process may be far more risky than a normal distribution is capable of describing if the fat tail is on the negative side, or far more profitable if the fat tail is on the positive side. Much of the human social world is said to be fat-tailed rather than normally distributed.

Shane Parrish's Farnam Street Mental Model Guide

“Eliminating consumer choices can greatly reduce anxiety for shoppers.” (related: Hick’s Law, “increasing the number of choices will increase the decision time logarithmically.”)

Gabriel Weinberg's Mental Models I Find Repeatedly Useful

"A state where a positive or negative feedback loop is feeding on itself and accelerating from it’s own momentum. How it’s useful Flywheels are a related concept to feedback loops, but are important for managing platforms and marketplaces. For example, imagine you run Apple’s iOS app platform. You have two users: app developers, and app users. The flywheel is the phenomenon where more app users attract more app developers (because there is more opportunity to sell), which in turn attract more app users (because there are more apps to buy), which in turn attract more app developers, and so on. As long as you nurture the flywheel, not only will you grow, but you’ll grow at an accelerating rate. If you’re managing a flywheel, you have to do everything you can to keep it spinning in the positive direction, because it’s just as powerful the other way. For example, if there are so many apps on the platform that new apps can’t get discovered anymore, app developer growth will slow and break the flywheel — you need to solve that. " — Brandon Chu

Product Management Mental Models for Everyone

"The problem hypothesis is a way to think about the viability of your product in a concrete, testable way. It works by reframing your idea for a product as a very specific problem. Say you’ve built a website that lets people order groceries and get them faster. That’s an idea that sounds like it could be good. It could also be bad. It’s hard to tell. When you reframe it as a problem, however, you see it differently: People like to buy groceries, but it takes them too long to get to the store and actually buy them. This is no longer a situation where you can say, “Hmm, could be good—could be bad.” Instead, you have a clearly verifiable statement. People like to buy groceries, but it takes too long—this is something that you can easily prove to be true or false in a few steps: * Go out and talk to the people waiting outside of Whole Foods for their Lyft to arrive. * Ask them how much time they spend grocery shopping every week. * Look everywhere for data to either prove that your hypothesis is correct or incorrect. * Use what you learn to either keep building, ditch the project, or pivot to build something more aligned with what people really need. * The simplicity of this technique is deceptive. Used correctly, the problem hypothesis can turn seemingly arbitrary decisions into ones you can validate quite easily. - Hiten Shah

Hiten Shah's 3 Mental Models Every PM Needs to Make Decisions

"There are three types of product development: Experiments, Features, and Platforms. Each have their own goal and optimal way to trade-off speed and quality. How it’s useful By recognizing the type of product development your project is, you will define more appropriate goals for each type, and you will right-size the speed and quality trade off that you make. Experiments are meant to output learning, so that you can invest in new features or platforms with customer validation. If you optimize for learning, you will consider doing things that otherwise wouldn’t be palatable: for example using hacky code that you intend to throw away, and faking sophisticated software when it’s just humans doing it behind the scenes. In contrast to experiments, platforms are forever. Other people will build features on top of them, and as such making changes to the platform after it’s live is extremely disruptive. Therefore, platform projects need to be very high quality (stability, performance, scalability, etc.) and they need to actually enable useful features to be built. A good rule of thumb when building platform is to build it with your first consumer, i.e. have another team simultaneously building a feature on your platform while you’re developing it — this way, you guarantee the platform actually enables useful features." — Brandon Chu

Product Management Mental Models for Everyone

“Allows one to estimate what the exchange rate between two currencies would have to be in order for the exchange to be at par with the purchasing power of the two countries’ currencies.”

Gabriel Weinberg's Mental Models I Find Repeatedly Useful

"Customer experiences don’t end at the interface. What happens before and after using the product are just as important to design for. How it’s useful When designing a product, we tend to over focus on the in-product experience (e.g. the user interface, in software). It’s just as important to design the marketing experience (how you acquire customers and set their expectations for the product before they use it), and the support/distress experience (how your company handles the product failing). Creating great distress experiences, in particular, are amazing opportunities to earn long term customer trust. For example, Amazon earns the most trust from you as a customer when you have to return something." — Brandon Chu

Product Management Mental Models for Everyone

1. Fail well. 2. Don’t feel bad about your mistakes or those of others. Love them!

Ray Dalio's Book Principles

"One of the simplest models in probability theory. A description of an urn model is as follows: Consider some vessel — an urn — with black and white balls. One ball is drawn at random from the urn, and then it is returned to the urn together with cc balls of the same colour as the ball drawn and dd balls of the other colour. After mixing the balls in the urn, the procedure is repeated a certain number of times. It is assumed that initially the urn contains a>0a>0 white and b>0b>0 black balls. The numbers cc and dd, the parameters of the urn model, may also be negative." - Encycopedia of Mathmatics

Scott Page Model Thinking MOOC Course

The equally famous Stanford Prison Experiment and Milgram Experiments demonstrated what humans had learned practically many years before: the human bias towards being influenced by authority. In a dominance hierarchy such as ours, we tend to look to the leader for guidance on behavior, especially in situations of stress or uncertainty. Thus, authority figures have a responsibility to act well, whether they like it or not.

Shane Parrish's Farnam Street Mental Model Guide

Higher-level behavior tends to emerge from the interaction of lower-order components. The result is frequently not linear – not a matter of simple addition – but rather non-linear, or exponential. An important resulting property of emergent behavior is that it cannot be predicted from simply studying the component parts. - Shane Parrish “Whereby larger entities, patterns, and regularities arise through interactions among smaller or simpler entities that themselves do not exhibit such properties.” (related: decentralized system, spontaneous order) - Gabriel Weinberg

Shane Parrish's Farnam Street Mental Model Guide https://www.farnamstreetblog.com/mental-models/ --- Gabriel Weinberg's Mental Models I Find Repeatedly Useful https://medium.com/@yegg/mental-models-i-find-repeatedly-useful-936f1cc405d

A deepity is a proposition that seems both important and true—and profound—but that achieves this effect by being ambiguous. On one reading it is manifestly false, but it would be earth-shaking if it were true; on the other reading it is true but trivial. The unwary listener picks up the glimmer of truth from the second reading, and the devastating importance from the first reading, and thinks, Wow! That’s a deepity. Example: Love is just a word. “love” is an English word, but just a word, not a sentence, for example.

Philosopher Daniel Dennett's Book Intuition Pumps