10 Mental Models You Can Use For Smart Decision Making

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It’s impossible to know everything. You just don’t have enough time to process all the information in the world. That’s where mental models come in. Over time, you want to build these little “rules of thumb” that you can use to make smart decisions.

Mental models give you a mental edge because they help you make decisions without needing to know every little thing about the subject of your decision. They’re little programs you can use to assess things much more quickly.

There are an infinite amount of mental models to choose from. You can, and should, make up some of your own. Let’s take a look at some of the models that have personally helped me transform my entire life over the past six years.

The Savvy Gambler Model
“Improving decision quality is about increasing our chances of good outcomes, not guaranteeing them.” — Annie Duke

You want to expose yourself to scenarios where the payoff is potentiallyhuge and the downside is limited. Some people call this antifragility.

There’s a great book called Little Bets that elaborates on this concept too. In general, the more you iterate, tinker, and create little experiments overall, the likelier you are to get one of them to pay off.

Take writing for example. You can’t sell negative books. You know that at worst you lose out on the investment you made into creating the book. At best, you have a runaway bestseller that creates additional career opportunities.

Or take my articles for example. I’ll write ~30 articles in a month. In any given month, 90 percent of the articles will have mediocre performance, but the 10 percent that does well does really, really well — so much so that they get more views than the other 90 percent of articles combined (times ten).

What are some examples of these antifragile scenarios?

Internet businesses — You can start many online businesses with low capital requirements. Take affiliate marketing where you only need a website and can promote digital products you didn’t even make yourself. There are six and seven-figure businesses that can be started for as little as five dollars per month.
Scientific discoveries — Thomas Edison said it best: “I have not failed. I’ve just found 10,000 ways that won’t work.” Many major scientific discoveries happened accidentally while the scientist was trying to solve a different problem (funny example: Viagra started from someone trying to make hypertension medication).
Getting to know more people — There’s a saying, you should treat the janitor as well as you do a CEO of a company. You never know who has the impact to change your life, so you should treat people well, if not for ethics, but out of pure self-interest.