My Mental Models

Better Decisions Using A Better Mental Framework

  • What Are Mental Models?
  • Models Checklist
  • Charlie Munger Quotes
  • Charlie Munger Reading List
  • Warren Buffett Books

Mental Model Summary: Base Rates

By Andrew McVagh, last updated August 7, 2018 3 Comments

Base Rates

Mental Model

Base Rates,  Base Rate Fallacy, and Bayes Theorem

Summary

A Base Rate is a type of probability that describes the likelihood of an event when no new or more specific information is available. 

Another way to think about it is that Base Rates cover the general or usual chance that something will (or will not) happen, as opposed to recent or more specific information that may alter the probability for the event.

The key idea is that Base Rates cover what usually happens if nothing new or interesting occurs to impact the outcome.​

Base Rate Neglect or Base Rate Fallacy refers to our tendency to ignore data about what usually happens and instead focus just on new, recent, or interesting information.

Bayes Theorem is a mathematical equation where you can input the Base Rate for an event along with the probabilities associated with new information to get the actual overall probability for the event.​

Continue Reading

Mental Model Summary: Checklists

By Andrew McVagh, last updated August 7, 2018 16 Comments

Mental Models Checklist

Mental Model

Checklists

Summary

A checklist is a tool that can be used to outline a set of 'things' that need to be completed.

Since humans have limited memory and attention, checklists help us accomplish tasks that would otherwise be too complex or error-prone.

The key idea is that checklists are a tool to help us increase accuracy and consistency.

Continue Reading

Mental Model Summary: Pareto Principle

By Andrew McVagh, last updated August 7, 2018 1 Comment

Pareto Principle

Mental Model

Pareto Principle (or 80/20 Principle)

Summary

The 80/20 principle is a type of power law which states that roughly 20% of a set of causes result in 80% of the effects.

​The numbers don't have to be exactly 80/20 though, and they don't have to add up to 100%: both '25/95' and '5/70' are also valid.

The key idea is that in most cases cause and effect are not linear: a small subset of causes usual generate most of the effects.​

Continue Reading
  • « Previous Page
  • 1
  • 2
  • 3

Popular Posts

  • 11 Brilliant And Funny Charlie Munger Quotes (Genius Wisdom)
  • 5 Amazing Warren Buffett Books (Learn How He Really Thinks)
  • The Charlie Munger Reading List (30+ Fascinating Books)
  • The Best Books On Mental Models
  • Blinkist Review: How To Make Progress On Your Reading List
  • Get My Mental Models Checklist

Mental Model Summaries

  • Mental Model Summary: Advantages of Scale
  • Mental Model Summary: Base Rates
  • Mental Model Summary: Checklists
  • Mental Model Summary: Creative Destruction
  • Mental Model Summary: Division of Labor
  • Mental Model Summary: Incentives
  • Mental Model Summary: Inversion
  • Mental Model Summary: Law of Small Numbers
  • Mental Model Summary: Pareto Principle
  • Mental Model Summary: Reason Respecting (Because Why)
  • Mental Model Summary: Redundancy
  • Mental Model Summary: Skill Stack
  • Mental Model Summary: Social Proof

Further Reading:

- What Are Mental Models?
- My Mental Models Checklist
- The Best Books On Mental Models
- The Charlie Munger Reading List
- Mental Model Summaries: The Complete List
- All Posts
 


About | Contact | Privacy Policy | Terms of Service | Disclosure Policy | Site Disclaimer

 

My Mental Models is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to amazon.com. Amazon and the Amazon logo are trademarks of Amazon.com, Inc. or its affiliates.

© 2023 · My Mental Models