• Jalal Ali

Thinking Framework: My big ideas for making rational decisions

Everybody makes hundreds of decisions; many unconscious and a few conscious. While many people believe they have made a rational decision, few can explain what mental models were used in the decision-making process.

Human beings have the tendency and the innate ability to rationalize their actions and decisions by fitting some logic to them. Therefore, rationality in decision making doesn't lie in what decision you’ve made or in the outcome, but rather in the process and framework you used in order to make a decision.

Mental Models serve as a great framework or toolbox for making sense of the world and making rational decisions. The beauty of the toolbox is that your tools have to come from a variety of disciplines. No one can better explain this than Charlie Munger:

“When I urge a multidisciplinary approach- that you’ve got to have the main models from a broad array of disciplines and you’ve got to use them all – I’m really asking you to ignore jurisdictional boundaries."

"Most people are trained in one model — economics, for example — and try to solve all problems in one way. You know the old saying: to the man with a hammer, the world looks like a nail. This is a dumb way of handling problems.”

I discovered that I use a variety of models unconsciously and if I made a list of them and write out what I know about them in simple language, they can be consciously referred to:

  1. The Power of Compound Interest

  2. Post-Purchase Rationalization

  3. Decision Parameters: A First and Vital Step in Decision Making

  4. Think Backwards and Avoid Stupidity in Life and Career

  5. The Difference Between Opinions and Facts

  6. Mind Your Opinion

More models to be added soon!

#decisionmaking #mentalmodel #thinking #rationality #CharlieMunger