Newsletter Week 32 | 2021

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Hey there.I hope you've had a great week.

What I've Made For You

New article: How I Process Inputs From the InternetOr, a guide to dealing with the seemingly infinite torrent of information that is The Internet. 

5 Mental Models for Better Thinking

A mental model is either an effective skill or knowledge structure that can be applied and adapted in various situations.

It is very much like an algorithm to solve a particular pattern of problems (problems similar in nature), although they may span a variety of fields.

We can use these models to become better thinkers.

Antifragility

That which gains from disorder. The opposite of fragile. It is beyond resilience or robustness; it gets better from shocks. A system that gets stronger as it gets hurt.

Network effects

Network effects; where products or services become more valuable as more people use them. Like social media platforms.

Perverse incentives

In India, there was a cobra problem people were often being attacked by cobras. So they began rewarding people for bringing them cobra skin. What happened? People started farming cobras. This did not help the problem. So they stopped incentivizing this behavior — they stopped rewarding it. This resulted in the farmers letting out the cobras, thereby worsening the problem.

When you incentivize some target which can be exploited, it will be.

The Barbell Strategy

Instead of opting for the median, going for both of the extreme ends of some situation in an attempt to remove downside.

In investing, it translates to investing in short- and long-term bonds, and not opting for the intermediate duration bonds.

The Lindy Effect

The life expectancy of a (non-perishable) thing is proportional to its current age. 

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To your success. Regards,

Christian Bager Bach Houmann