up:: [[Concepts MOC]], [[Thinking MOC]] tags:: #concept # Munger's Mental Models ## Short List of Munger's Models * Math (Munger is particularly fond of the algebraic idea of inversion, that is, to solve a problem you address it backwards) * Accounting (and its limits) * Engineering (according to Munger, the ideas of redundancies and break-points are applicable outside of engineering and can be applied to business) * Economics * Probability * Psychology (specifically the cognitive biases that cause us to make terrible decisions) * Chemistry * Evolutionary biology (can provide insights into economics) * History * Statistics ## Long List of Munger's Models 1. **Accounting** 2. Balance Sheet 3. Cash Flow Statement 4. Depreciation 5. Double-Entry 6. Generally Accepted Accounting Principles 7. Income Statement 8. Sunk Cost 9. **Biology:** 10. Genetics 11. Natural Selection 12. Physiology 13. **Business:** 14. Moats 15. Five Forces 16. Brand 17. **Chemistry:** 18. Autocatalytic reactions 19. Bohr Model 20. Kinetics 21. Thermodynamics: 22. Uncertainty Principle 23. Viscosity 24. **Computer Science:** 25. Abstractions 26. Algorithms 27. If-statements 28. Recursion 29. **Economics:** 30. Agency Problem 31. Asymmetric Information 32. Behavioral Economics 33. Cumulative Advantage 34. Comparative Advantage 35. Competitive Advantage 36. Creative Destruction 37. Diminishing Utility 38. Economies of Scale 39. Elasticity 40. Externalities 41. Markets 42. Marginal Cost 43. Marginal Utility 44. Monopoly and Oligopoly 45. Network effects 46. Opportunity Cost 47. Price Discrimination 48. Prisoner’s Dilemma 49. Public and Private Goods. 50. Specialization 51. Supply and Demand 52. Switching Costs 53. Transaction Costs 54. Tragedy of the Commons 55. Time Value of Money 56. Utility 57. **Engineering:** 58. Breakpoints 59. Feedback loops 60. Margin of Safety 61. Redundancy 62. **Law:** 63. Burden of Proof 64. Common law 65. Due Process 66. Duty of care 67. Good Faith 68. Negligence 69. Presumption of Innocence 70. Reasonable doubt 71. **Management Science:** 72. Occam’s razor 73. Parkinson’s Law 74. Process versus Outcome 75. **Mathematics, Probability and Statistics:** 76. Agent Based Models 77. Bayes Theorem 78. Central Limit Theorem 79. Complex Adaptive Systems 80. Correlation versus Causation 81. Combinations 82. Compounding 83. Decision Trees 84. Inversion 85. Kelly Optimization Model 86. Law of Large Numbers 87. Mean, Median, Mode 88. Normal Distribution 89. Permutations 90. Power Law 91. Regression Analysis 92. Return to the Mean 93. Scaling 94. Sensitivity Analysis 95. **Philosophy, Literature and Rhetoric:** 96. Metaphors 97. Similes 98. Abduction 99. Pragmatism 100. Realism 101. Reductionism 102. **Physics:** 103. Critical Mass 104. Electromagnetism 105. Equilibrium 106. Inertia 107. Newton’s Laws 108. Momentum 109. Quantum Mechanics 110. Relativity 111. Shannon’s Law 112. Thermodynamics