On Mental Models

03 September, 2021 - 10 min read

Before you proceed, ask yourself, what is the purpose of wisdom?

For me, it is clear, I am in the business of making right decisions and therefore acquiring wisdom is purposeful. For many, this is true as well. I also operate with the mindset of not understanding the world and will most likely won't ever. But if I make 6 out of 10 right decisions, then exercising to acquire wisdom is a worthwhile exercise. Note, it is not to make myself look or sound smart. It is simply to make more right decisions than wrong.

Given the nature of the world and it being so dynamic, it would be foolish to spend time alone in one field. Therefore, mental models can be useful.

We all think of Charlie Munger [0] when we talk about latticework of mental models. He is one of the greatest thinkers of our generation, a living legend and a business partner of a famous investor Warren Buffett. Charlie Munger has lived (and still is) an intellectually stimulating life which he credits to mental models. He has spent more time thinking about making right decisions than anyone else I know. It was natural for me to follow his route and conduct a deeper understanding of mental models.

I think it is undeniably true that the human brain must work in models. The trick is to have your brain work better than the other person’s brain because it understands the most fundamental models–ones that will do most work per unit. – Charlie Munger

One of the advantages of a fellow like Buffett, whom I've worked with all these years, is that he automatically thinks in terms of decision trees and the elementary math of permutations and combinations. – Charlie Munger

Latticework of mental models

Mental models are big ideas from big disciplines, like business, psychology, science, engineering, and more. An understanding of the key concepts from different disciplines will help you ask the right questions to help make wise decisions. The task of decision making is quite challenging in a complex and interconnected world. To be a world-class thinker and a better leader, you must develop a mind that can jump boundaries from one discipline to another.

As the Japanese proverb goes, “The frog in the well knows nothing of the mighty ocean.” You ought to jump the boundaries of your specialized field to overcome complex and dynamic systems of life. Being in one well will cloud your thought process preventing you to understand life beyond the well. To clear up your blind spots, learn to explore wells, ponds, rivers, lagoons, canals and oceans. Combining models from various disciplines produces a cohesive understanding.

So, how do you achieve worldly wisdom by jumping boundaries?

  1. Acquire fundamental knowledge (big ideas) from big disciplines.
  2. Understand common patterns, fallacies and biases of human nature.
  3. Question your models and test them against reality.
  4. Apply these models and biases rigorously in your decision making.
  5. Not all models are useful so handle them with care.

Mental models vs algorithms

A mental model is more like a searchlight than a road map. It doesn’t tell you the answer directly, or where to find the answer, it shows you how to look for it. A mental model is heuristic–it enables you to learn and discover for yourself, it is a far cry from an algorithm's well-defined instructions for carrying out a particular task. Algorithms are predictable, deterministic, and not subject to chance.

A mental model is a technique that helps you look for an answer. Its results are subject to chance because a mental model tells you how to look, not what to find. It doesn’t tell you how to get directly from point A to point B. In effect, a mental model is an algorithm in a clown suit. It’s less predictable, it’s more fun, and it comes without a 30-day, money-back guarantee.

Here is an algorithm for driving to your grandma's house. Take Highway 290 West to Rosemont in Chicago. Take the State Street exit and drive 2.5 miles up the Congress Parkway. Turn right at the light by the gas station, and then take the first left. Turn into the driveway of the large white house on the left, at 111 Windy City.

Here is a mental model for getting to your grandma's house. Find the last letter we mailed you. Drive to the town in the return address. When you get to town, ask someone where our house is. Everyone knows us-someone will be glad to help you. If you can’t find anyone, call us from a public phone and we’ll give you the instructions directly. A mental model tells you how to discover the instructions for yourself, or at least where to look for help.

Map is not the territory

Alfred Korzybski, a famous mathematician in 1931 made a simple observation—the map is not the territory. This allows you to assess the usefulness of models. Maps (mental models) are thought of as a representation of reality. They distill complex ideas into simple concepts that can be processed by our brains which enable us for faster decision making. But maps do not represent reality. A map indeed can be flawed when entering uncharted territories. Ask early European sailors who went on voyages to explore deep seas and new lands.

(History) offers a ridiculous spectacle of a fragment expounding the whole. — Will Durant

This brings me to the next point. All models are wrong, but some are useful [1]. Those words came from a British statistician, George Box. He revealed the fallacy of our desire to organize the world in patterns. We at times confuse models with reality because we prefer simplification. But that is not how reality works. Models never reflect complete truth.

Remember that all models are wrong; the practical question is how wrong do they have to be to not be useful. — George Box

Some mental models work better than others in some situations and knowing which models to use and when is a key part of good judgment. Focusing on timeless models that have been around for a long time and consistently testing them against reality will help you use them right.

No idea is true just because someone says so. Test ideas by the evidence gained from observation and experiment! If a favorite idea fails a well-designed test, it’s wrong! — Richard Feynman

To overcome the challenge of model thinking, always have bias for action. Keep in mind that when in doubt, it'll be action that produces information. So when map and terrain differ, follow the terrain.

The world doesn’t have the luxury of waiting for complete answers before it takes action. — Daniel Gilbert

Charlie Munger

Munger gave a famous speech, “A Lesson on Elementary Wisdom” [2] in 1995 speech at USC Business School about worldly wisdom and latticework of mental models. Below are some of the references from his speech.

What is elementary, worldly wisdom? Well, the first rule is that you can’t really know anything if you just remember isolated facts and try and bang ‘em back. If the facts don’t hang together on a latticework of theory, you don’t have them in a usable form. You’ve got to have models in your head. And you’ve got to array your experience — both vicarious and direct — on this latticework of models. — Charlie Munger

You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head. — Charlie Munger

What are the models? Well, the first rule is that you’ve got to have multiple models — because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models, or at least you’ll think it does. You become the equivalent of a chiropractor who, of course, is the great boob in medicine. — Charlie Munger

It’s like the old saying, “To the man with only a hammer, every problem looks like a nail.” And of course, that’s the way the chiropractor goes about practicing medicine. But that’s a perfectly disastrous way to think and a perfectly disastrous way to operate in the world. — Charlie Munger

So you’ve got to have multiple models. And the models have to come from multiple disciplines—because all the wisdom of the world is not to be found in one little academic department. That’s why poetry professors, by and large, are so unwise in a worldly sense. They don’t have enough models in their heads. — Charlie Munger

So you’ve got to have models across a fair array of disciplines. — Charlie Munger

You may say, “My God, this is already getting way too tough.” But, fortunately, it isn’t that tough—because 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. — Charlie Munger

You have to learn all the big ideas in the key disciplines in a way that they’re in a mental latticework in your head and you automatically use them for the rest of your life. If you do that, I solemnly promise you that one day you’ll be walking down the street and you’ll look to your right and left and you’ll think “my heavenly days, I’m now one of the few competent people in my whole age cohort.” If you don’t do it, many of the brightest of you will live in the middle ranks or in the shallows. — Charlie Munger

I went through life constantly practicing (because if you don’t practice it, you lose it) the multi-disciplinary approach and I can’t tell you what that’s done for me. It’s made life more fun, it’s made me more constructive, its made me more helpful to others, its made me enormously rich. – Charlie Munger

He also gave another famous speech, “The Psychology of Human Misjudgement” [3] in 1995 at Harvard Law School about human psychology and biases.

I was aware that man was a “social animal,” greatly and automatically influenced by behavior he observed in men around him. I also knew that man lived, like barnyard animals and monkeys, in limited size dominance hierarchies, wherein he tended to respect authority and to like and cooperate with his own hierarchy members while displaying considerable distrust and dislike for competing men not in his own hierarchy. — Charlie Munger

In this speech he lays out 25 tendencies as a checklist to make better decisions and live a better life as a result.

  1. Reward and Punishment Superresponse Tendency
  2. Liking/Loving Tendency
  3. Disliking/Hating Tendency
  4. Doubt-Avoidance Tendency
  5. Inconsistency-Avoidance Tendency
  6. Curiosity Tendency
  7. Kantian Fairness Tendency
  8. Envy/Jealousy Tendency
  9. Reciprocation Tendency
  10. Influence-from-Mere-Association Tendency
  11. Simple, Pain-Avoiding Psychological Denial
  12. Excessive Self-Regard Tendency
  13. Overoptimism Tendency
  14. Deprival-Superreaction Tendency
  15. Social-Proof Tendency
  16. Contrast-Misreaction Tendency
  17. Stress-Influence Tendency
  18. Availability-Misweighing Tendency
  19. Use-It-or-Lose-It Tendency
  20. Drug-Misinfluence Tendency
  21. Senescence-Misinfluence Tendency
  22. Authority-Misinfluence Tendency
  23. Twaddle Tendency
  24. Reason-Respecting Tendency
  25. Lollapalooza Tendency


  • [0] Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger, Expanded Third Edition
  • [1] All models are wrong
  • [2] Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger, Expanded Third Edition
  • [3] Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger, Expanded Third Edition