First Discussion - Top 10 Mental Models

| Model | Description |
| ----- | ----------- |
| 1. First Principles | Breaking a problem down to its basic truths and building up from there, rather than reasoning by analogy or "how it's always been done." |
| 2. Second-Order Thinking | Asking "And then what?" It involves considering the long-term consequences of a decision, not just the immediate result. |
| 3. Occam’s Razor | The idea that among competing hypotheses, the simplest explanation is usually the correct one. |
| 4. Pareto Principle (80/20) | The observation that 80% of outputs or consequences often come from 20% of the causes or inputs. |
| 5. Inversion | Approaching a problem backward. Instead of asking how to succeed, ask "How could I guarantee failure?" and then avoid those things. |
| 6. Circle of Competence | Identifying the areas where you have genuine knowledge and staying within them to avoid costly mistakes. |
| 7. Map vs. Territory | A reminder that a description of reality (a map) is not reality itself (the territory). Models are useful, but they are always simplifications. |
| 8. Compounding | The process where the value of an investment (or habit) increases exponentially over time because the earnings earn interest themselves. |
| 9. Hanlon’s Razor | Never attribute to malice that which is adequately explained by stupidity or misunderstanding. |
| 10. Entropy | The law of thermodynamics stating that systems naturally trend toward disorder. Without conscious effort (energy), things fall apart. |