Introduction Braess’s Paradox is a mental model that challenges our intuition about decision making by demonstrating that adding more resources or options can lead to worse outcomes. This counterintuitive phenomenon has implications in various domains, from personal life decisions to business strategies and public policy-making. Understanding the psychological underpinnings and prevalence of Braess’s Paradox can […]
Introduction In the realm of decision-making, understanding the mental models that shape our choices is invaluable. One such powerful model is the Kelly Criterion. This concept provides a systematic approach to managing risk and maximizing long-term growth. Anchored in human psychology, the Kelly Criterion influences our day-to-day lives, from personal decisions to business strategies and […]
Introduction In the realm of decision-making, our pursuit of rewards and outcomes is often accompanied by a phenomenon known as the Law of Diminishing Reward. This mental model suggests that as we continue to invest time, effort, or resources into a particular endeavor, the incremental returns diminish over time. Understanding this concept is crucial in […]
Introduction In the realm of decision-making, the human mind often grapples with limited time, resources, and attention. In such circumstances, understanding and applying the Pareto Principle can be a valuable mental model. The Pareto Principle, also known as the 80/20 rule, states that roughly 80% of the effects come from 20% of the causes. This […]
Introduction In the intricate landscape of decision-making, the mental model of mental accounting holds a crucial role. Mental accounting refers to the tendency of individuals to compartmentalize and assign different values to money, resources, and investments based on subjective factors. Anchored in human psychology, this mental model sheds light on how our financial and non-financial […]
Introduction In the realm of decision-making, the mental model of diversification plays a significant role. Diversification refers to the practice of spreading one’s resources, efforts, or investments across a range of options or areas. It is a strategy employed to reduce risk, increase opportunities, and achieve a sense of security. Anchored in human psychology, this […]