Principles, methods and mental models from psychology

briefly explained, with examples and sources.

• Circle of competencemental model

  How much you know matters less than knowing where your knowledge ends. Studies show that people judge their standing relative to others poorly, especially weak performers. How large the effect is and where it comes from are still debated.

• Compoundingmental model

  When gains are added to the base and go on to earn gains of their own, growth is exponential, not linear. Studies show that people think linearly by intuition and badly underestimate this kind of growth, which leads them, for example, to put off saving.

• Cost of action vs cost of inactionmental model

  Doing nothing is also a choice, with its own costs. Research shows that we judge harm caused by an action more harshly than the same harm caused by inaction, even though, looking back, we more often regret what we didn't do.

• Delayed gratificationprinciple

  The ability to give up a small, immediate reward for a larger one that comes later. Research shows that it depends a lot on where you keep your attention and on how much you trust that the promised reward will actually come.

• Diminishing returnsmental model

  Each extra unit of a good thing usually brings less than the one before. For money, large studies show that well-being rises with income, but by roughly the same step for every doubling, not for every extra amount.

• Ego depletionprinciple

  The idea that willpower is a limited resource, used up by every act of self-control, was one of the most cited in psychology. Large preregistered replications no longer found the effect in the lab. Fatigue is real, but the "willpower tank" remains an unsupported hypothesis.

• First-order negative, second-order positivemental model

  The immediate consequences of a decision (first-order) often pull in the opposite direction from the ones that follow them (second-order). Dalio argues that those who judge only by the first rarely reach their goals.

• Habit formationprinciple

  A habit forms by repeating the same behaviour in the same context until it becomes automatic. It doesn't take 21 days, as people say: in studies, the median was about two months, with very large differences from person to person.

• Implementation intentionsmethod

  A plan of the form "if situation X arises, then I will do Y" that complements a goal. Two meta-analyses show that such plans increase the chances of moving from intention to action, especially when the goal really matters to you.

• Maximizing vs satisficingmental model

  Some people look for the best possible option (maximizing), others choose the first option that clears their bar (satisficing). Studies by Schwartz and colleagues show that maximizers sometimes get objectively better outcomes but are less satisfied with them.

• Opportunity costmental model

  The real cost of a choice is the best alternative you give up. Studies show that people rarely think of that alternative on their own, but that a simple reminder of it changes their decisions. The effect is real, but smaller than first thought.

• Pareto principleprinciple

  In many fields, a few causes produce most of the effect. This concentration is real and measurable, but the exact ratio varies a lot from case to case. "80/20" is an easy-to-remember formula, not a law.

• Planning fallacyprinciple

  People usually underestimate how long their own projects will take, even when they know that similar projects ran late. It helps to start from how long similar cases took, not from your plan.

• Regression to the meanmental model

  An extreme result is usually followed by one closer to the average, even if you do nothing. If you don't account for this, you end up believing that praise hurts, criticism helps or a treatment worked, when it was only chance.

• Spacing and retrieval practicemethod

  You remember more in the long run if you split your studying into several sessions and test yourself instead of rereading. In the moment, rereading feels more effective, but after a few days testing clearly wins.

• Sunk costprinciple

  Money, time or effort already spent won't come back, whatever you decide now. Still, people tend to keep going with something just because they have already invested in it. It helps to judge each decision by what comes next, not by what has been spent.

• Via negativamental model

  Sometimes the best improvement is to take something away, not to add. Studies show that people reflexively look for additive solutions and miss subtractive ones, but that a simple reminder that they can also remove things changes their ideas.