This post is part of the đź“– Mental Models series.
Today, I am reading the 8th mental model Look for Equilibrium Points and 9th mental model Wait for the Regression to the Mean from How to See More Clearly chapter of the book Mental Models written by Author Peter Hollins.
Mental Models are like giving a treasure map to someone lost in the woods. They provide instant understanding, context, and most importantly, a path to the end destination. Now imagine having such a map for all problems and decisions in your life.
In this book Mental Models, author Peter Hollins discuss 30 mental models that billionaires/CEOs, Olympic athletes, and scientists use to think differently and avoid mistakes.
Battle information overwhelm, focus on what really matters, and make complex decisions with speed and confidence.
Yesterday, I finished reading the 7th mental model Ignore “Black Swans”.
Chapter #2: How to See More Clearly
Mental Model #8:
Look for Equilibrium Points
Use to find real patterns in data and not be fooled
This is an economic principle that describes how an increase in resources doesn’t always correspond to an increase in the outcome you want.
In plain terms, this means that where you might be ecstatic to eat one doughnut, the amount of joy you feel will drastically decrease as you get to doughnut number ten.
We get back from our efforts by decreasing what we were seeking; there is a natural rate of decay for where the more resources we put into something, the less we get out of it.
Mental Model #9:
Wait for the Regression to the Mean
Use to find real patterns in data and not be fooled. (Yes, again)
Sometimes we mistake an “extreme” or extraordinary event for something we need to plan around, but more often than not, the event is just an “outlier” that doesn’t really signify how things are.
Even if a big event or happening shakes up our immediate surroundings, it shouldn’t automatically use it to assume a “new reality.”
More likely than not, the black swan event won’t (or at least shouldn’t) have a total, utter change to your daily experience or beliefs.
Related to that is the idea of “regression to the mean.”
The “mean” essentially represents something akin to an “average”: a sort of midpoint that indicates some normalcy, a kind of “typical” value.
In our definition, “the mean” means the usual or most common status of a given situation.
Key Takeaways
- There is no linear relationship between input and output. Sometimes it is even an inverse relationship (the more resource, the less output).
Summary
-
Look for Equilibrium Points mental model is about noticing trends in progress.
-
When you first start something, you go from zero to one—that’s an infinite rate of progress. Then you go from one to two, two to three, and so on, and the rate of progress slows, and the returns start diminishing.
-
Somewhere around there is an equilibrium point that truly represents what the average mean will be. Don’t make the mistake of not waiting for it.
-
Wait for the Regression to the Mean mental model is the final mental model about seeing the whole picture in terms of information.
-
A change without reason for the change is not a change; it’s just a deviation. As such, it doesn’t represent what will continue to happen in the future.
-
A regression to the mean is when things settle back down and resume what they were doing before—this is representative of reality.
That’s it for today. Tomorrow, we will read the 10th mental model What Would Bayes Do (WWBD)?, use to calculate probabilities and predict the future based on real events.
-
Address “Important”; Ignore “Urgent”
Identify and address important tasks, ignore urgent tasks. Delegate important but non-urgent task and delete not important and not urgent tasks.
-
Visualize All the Dominoes
Don’t stop your analysis once the most obvious situations are articulated. Consider as many long-term possible ramifications as you can. Think twice about what you’re doing, and it helps to eliminate rash decisions.
-
Make Reversible Decisions
If you want to make the best decision possible, you can go ahead and use reversible decisions to learn exactly what you need to know.
-
Seek “Satisfaction
We need far fewer things than we originally thought and that our desires are masquerading as needs. Use Seek “Satisfaction” to achieve your priorities and ignore what doesn’t matter by creating a default choice.
-
Stay Within 40-70%
Utilize this mental model by intentionally consuming less information and even overgeneralizing — this means not looking at the subtleties of your options.
-
Minimize Regret
Minimize Regret. Jeff Bezos developed what he calls the regret minimization framework. In it, he asks one to visualize themselves at age 80 and ask if they would regret making (or not making) a decision. This simplifies decisions by making them about one metric: regret.
-
Ignore “Black Swans”
A black swan event is an entirely unpredictable event that comes out of nowhere. Doing so skews all data and beliefs, and people start to take the black swan into account as a new normal. But these are just outliers that should be ignored.
-
Look for Equilibrium Points
This mental model is about noticing trends in progress.
When you first start something, you go from zero to one—that’s an infinite rate of progress. Then you go from one to two, two to three, and so on, and the rate of progress slows, and the returns start diminishing.
Somewhere around there is an equilibrium point that truly represents what the average mean will be. Don’t make the mistake of not waiting for it.
-
Wait for the Regression to the Mean
This mental model is the final mental model about seeing the whole picture in terms of information.
A change without reason for the change is not a change; it’s just a deviation. As such, it doesn’t represent what will continue to happen in the future.
A regression to the mean is when things settle back down and resume what they were doing before—this is representative of reality.
Author(s): Peter Hollins
Part 9 of 29 in the đź“– Mental Models book series.
Series Start | Mental Models - Day 8 | Mental Models - Day 10