Introduction In the realm of decision-making, the mental model of Redundancy plays a critical role in mitigating risks and improving outcomes. Redundancy refers to the intentional inclusion of backups or duplicates in a system or decision-making process. It is rooted in human psychology and prevalent in our daily lives. This blog post aims to explore […]
Introduction In the realm of decision-making, there exists a mental model known as Gresham’s Law. Coined by economist Sir Thomas Gresham in the 16th century, this concept states that bad money tends to drive out good money from circulation. Gresham’s Law highlights how individuals and societies, driven by self-interest, often prioritize inferior or counterfeit currency […]
Introduction: In the realm of decision-making, a critical turning point known as the Minsky Moment can have profound consequences. Coined by economist Hyman Minsky, this mental model refers to a sudden collapse or crisis that occurs when participants in an economy or market become overly optimistic and take on excessive risk. The Minsky Moment is […]
Introduction: In the realm of decision-making, a fundamental challenge arises when one party, known as the principal, delegates authority to another party, known as the agent, to act on their behalf. This situation sets the stage for the Principal-Agent Problem, a concept rooted in human psychology that has profound implications for our day-to-day lives. The […]
Introduction In the realm of decision-making, humans often find themselves swayed by a range of cognitive biases that lead to irrational choices. One such mental model, the Fisher Effect, holds significant relevance in understanding the intricacies of decision-making processes. The Fisher Effect refers to the tendency of individuals to mistakenly believe that real returns on […]