The value of what you have to give up in order to choose something else. As with any other cost, the goal is to minimize it. Opportunity costs are very real.

Sometimes called Schumpeter’s gale and formulated after Austrian economist Joseph Schumpeter, creative destruction is a theory of economic innovation and the business cycle in a free-market economy. It refers to the incessant product and process innovation mechanism by which new production units replace outdated ones – or ones stuck without innovation.

The invention of the double-entry bookkeeping system traces all the way to Genoa in 1494 when the first book on the subject was published by Luca Pacioli. Ever since then, the system of balancing the books by using two accounts for every entry has hardly changed.

As a foundational model in the theory of international trade, Scottish economist David Ricardo found that all actors, at all times, can mutually benefit from cooperation and voluntary trade if those actors focus on what they are comparatively best at in terms of opportunity cost.

An attempt to make a profit (economic rent) at the expense of others rather than by creating new value. An example is using resources on political lobbying to promote specific legislation that serves one’s own interests.

The transaction costs or disadvantages a buyer incurs from switching to another seller.

When two or more participants in a non-cooperative game have no incentive to deviate from their respective equilibrium strategies after considering their opponent’s choices and strategies on a rational basis.

Based on John Maynard Keynes’s general theory, the AD-AS model explains the level of prices and national income through the relationship of aggregate demand and aggregate supply. Being a fundamental tool in economics, it’s an incredibly powerful model when thinking about macroeconomic effects in the short, medium, and long term.

Controlling the center of something provides greater flexibility and mobility of choices compared to one’s competitor. In chess, if you don’t control the center squares and let your opponent control them, they will have an easier game than if they have to fight for their control. A piece does not have to physically be on a central square to control the center. For example, the bishop can control the center from afar.

Sometimes termed division of labor, specialization refers to the process by which participants in a free-market system divide into different sets of skills to increase efficiency. By increasing productivity within each field of specialization, the whole system benefits.

The introduction of intellectual property rights into society has been a huge accelerator of societal creativity. Such rights include intangible creations of the human intellect. There are many types of them, and some countries recognize more than others. The most well-known are copyrights, patents, trademarks, and trade secrets. If individuals and corporations get these right, they can create defensible economic moats against the competition. And as long as ongoing research and development and capital expenditures can be managed, there is tremendous leverage in this model.

The concept used to assess how satisfaction levels affect consumer decisions. The law of diminishing marginal utility describes how the initial units of a good or service carry more utility than each additional unit.

The economic measure of how responsive an economic variable, such as demand, is to a change in another, such as price. An elastic variable has an absolute elasticity value greater than 1 and responds more than proportionally to changes in the dependent variable. An inelastic variable has an absolute elasticity value less than 1 and changes less than proportionally to changes in the dependent variable.

Being the main model of price determination used in economic theory, the supply and demand relationship explains a lot of things in the world. The basic premise is that prices settle at equilibrium when demand equals supply.

A loss of economic efficiency that is caused by supply and demand being out of equilibrium. Such causes may include price and rent controls, minimum wages, taxation, and monopolies.

A situation where either party to an entered agreement changes its behavior after the contract is completed so that the probabilities attributed to either party’s way of acting no longer apply. It’s called moral hazard because the party is no longer fully affected by the negative effects of its own actions. Thus, it might be incentivized to act less cautiously than otherwise.

Matter, either tangible or intangible, can get clogged if pushed too quickly through a system than what that system can handle. Every system is limited by various constraints with some critical and some less critical. No change to the system will result in overall improvement unless that change addresses the bottleneck. The term is named after the narrow point of a typical bottle.

Bribery is a form of a moral-breaking bottleneck in human systems which is hard to eliminate. The concept can in some circumstances significantly affect other models such as price discovery, incentive-induced bias, and so on.

The attempt to profit by exploiting price differences in identical or similar financial instruments, capitalizing on the imbalance. As more and more arbitrageurs participate, such opportunities diminish and eventually vanish. The traditional definition of arbitrage concerns a 100% risk-free activity after transaction costs. But in practice, that is rarely certain.

Limited availability of something gives rise to trade-off. Rarely is something of limitless supply, except maybe the need for it. Scarcity involves making a sacrifice by giving something up—or making a trade-off—in order to obtain more of the scarce resource that is wanted.

Benjamin Graham proposed imagining the stock market as a somewhat manic and not too intelligent profile who would stop by every day to call out prices. Mr. Market will not care if you are interested but will show up every day. However, his mood is subject to extreme changes. There will be times when he is optimistic about the future and so his prices will be high. There will be times when he is pessimistic about the future and so his prices will be low. For the most part, it’s best to ignore his shouting. But when Mr. Market becomes extremely worked up—either excited or depressed—you can exploit his out-of-boundary prices.

A direct relation to the concept of money neutrality, named after economist Irving Fisher. The Fisher effect states that the real rate of interest in an economy is stable over time so that changes in nominal interest rates are the result of changes in expected inflation. Therefore, the nominal interest rate in an economy is the sum of the required real rate of interest and the expected rate of inflation over any given time horizon.

Charlie Munger explains: I’ve had many friends in the sick-business-fix-up-game over a long lifetime. And they practically all use the following formula — I call it the cancer surgery formula: They look at this mess and they figure out if there’s anything sound left that can live on its own if they cut away everything else. And if they find anything sound, they just cut away everything else. Of course, if that doesn’t work, they liquidate the business. But It frequently does work.

You won’t be able to surf if you don’t catch the wave. And if you do catch it, you can stay on it for long. The trick is catching the one that lasts the longest as early as possible and not to get off. Microsoft was a result of a 16-year-old catching a wave of software revolution right on the edge.

Developed by Michael Porter in 1979, Porter’s Five Forces is a framework to look at competitive forces in an industry. The five undeniable forces are: 1) threat of new entrants, 2) threat of substitutes, 3) bargaining power of customers, 4) bargaining power of suppliers, and 5) competitive rivalry.

A historical inverse relationship between rates of unemployment and corresponding rates of rises in wages that result within an economy.

Where two (or more) things are equal to each other. In economics, this might include equality in price, rate of exchange, purchasing power, or wages. Parity conditions typically make simplifying assumptions, such as zero transaction costs, perfect information that is available to all market participants, risk neutrality, and freely adjustable market prices.

Transaction costs can essentially be divided into three broad categories:

The situation where leaders of companies are so emotionally invested in them that they can’t effectively delegate decisions, leading to micromanagement and stasis.

More expensive goods are less likely to be used regularly than cheaper alternatives even though the higher price might indicate higher quality. The relationship between price and utility is an inverted U.

In open cry auctions and bidding wars, the winning bid has a tendency to exceed the intrinsic value of the item won. The smartest side to take in a bidding war is the losing side.

During times of crisis, government spending increases but has a tendency to not fall back to pre-crisis levels when the crisis is over.

A freely competitive market is a mechanism that is constantly self-evolving, self-advancing, and self-perfecting. When there is more than one market, the largest will eventually become the only one, since if any individual, society, enterprise, or nation is removed from this single market, it will start to steadily fall behind and will ultimately be forced to join in.

According to Say’s law, supply creates demand because the income generated by past production and sale of goods is the source of spending that creates the demand to purchase current production. The reasoning is that to have the means to buy, a buyer must first have produced something to sell. And thus, the source of demand is production itself. As actor Kevin Costner says in the movie, Field of Dreams: If you build it, he will come.

The effect of how eliminating consumer choices can greatly reduce anxiety for users. There are, however, certain limitations about this paradox. Should there then be no choice at all? And if that be the case, how would business look like? If so, would all industries operating in an oligopoly switch to a monopoly leading to higher prices?

Related to the paradox of choice, Hick’s law poses that increasing the number of choices will increase decision time logarithmically. The more choices presented to users, the longer it will take them to reach a decision but the marginal decision time per extra choice decreases.

A form of market failure where those who benefit from resources, goods, or services do not pay for them, which results in an under-provision of those goods or services. If someone builds a lighthouse, all sailors will benefit from its illumination.

When bad news is revealed, there may be many more related negative events yet to be revealed. There’s never just one cockroach in the kitchen.

A subject in game theory indicating a strategy that is impenetrable by competitors once initiated. The evolutionary stable strategy creates a form of Nash equilibrium that is “evolutionarily” stable: once it is fixed in a population, natural selection alone is sufficient to prevent alternative strategies from successfully invading.

Known unknowns are risks one is aware of, such as canceled flights or worker injuries. Unknown unknowns are risks coming from situations that are so out of this world that they are not imagined in advance.

A term borrowed from physics, critical mass is the minimum amount of something required to sustain itself going forward. In the scene of social networks, critical mass refers to the number of adopters for a system that is required for the further adoption rate to be self-sustaining. In nuclear physics, it’s the smallest amount of fissile material needed for a sustained nuclear chain reaction.

A pricing strategy by which a good or service is offered for free to spur the growth of adoption but with a price charged for proprietary features or functionality. The business strategy has been used in the software industry since the 1980s.

A sourcing model for soliciting ideas or finances from a large group of participants rather than from employees or suppliers. It’s a method of “outsourcing work to the crowd”.

When multiple uncorrelated subjects move with certain volatilities, splitting the interest between them produces collective volatility which is lower than either of those subjects’ volatilities. The strategy of diversification is commonly used in portfolio management by allocating capital to a mix of different investments with the ultimate goal of reducing volatility.

The value of a bank is easier to value based on how efficiently it utilizes the 3-6-3 rule which goes like this: a bank pays 3% on savings accounts, loans out money to businesses with solid financials at 6%, and then the banker leaves the office at 3 p.m. to play golf.

The advantage gained by the initial significant occupant of a market. First-mover advantage may be gained by technological leadership or early purchase of resources. However, in certain growth markets, the last-mover might be better positioned competitively if it’s able to introduce the last great development in that market to gain years of monopoly profits.

The theory of delegation and accountability between individuals used in many areas of social sciences, but primarily political science and economics.

The quality of goods traded in a market can degrade in the presence of information asymmetry between buyers and sellers, leaving only “lemons” behind – e.g. a car that is found to be defective after purchase.

A sudden collapse of asset values marking the end of a credit cycle or an economic cycle.

A thought experiment by Peter Thiel stating that technology and globalization are different modes of progress. Globalization is horizontal progress that goes from 0 to n while technology is vertical and goes from 0 to 1.

Any game should either be played as a Winner’s Game or a Loser’s Game.

It is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data

Trust is a fundamental part of human nature and is pretty much all-encompassing in all we do. Trust produces increased speed, efficiency, empower ethical decision making, and hence, decreases costs.

The tendency to judge the frequency of events in the world by the ease with which examples come to mind. We tend to most easily recall what is salient, important, frequent, and recent. So, we make decisions based on what we most easily recall but this undermines our ability to accurately judge frequency and magnitude.

The tendency to rely too much on an initial piece of information when making subsequent judgments. The cognitive bias of anchoring is closely related to availability heuristic since the mind anchors to what information is familiar.

A social norm of responding to a positive action with another positive action, even if the action received has been unwanted. The interesting thing is that the positive action returned is oftentimes bigger than the initial action received.

Trying to avoid envy in an interconnected world is very difficult. It’s a phenomenon that lies deep in human nature going back to ancient times. The Stoics warned against the consequences of envy, but yet it’s still ingrained in human nature as ever. Warren Buffett says: It is not greed that drives the world, but envy.

Denial is a powerful psychological effect. When reality is too painful to bear, denial just distorts it until it’s bearable. The refusal to accept reality or fact is a primitive defense or survival mechanism.

A situation that triggers a particular biological response when perceiving threat or standing in front of a major challenge. Stress triggers your fight-or-flight response and traces all the way back to assisting hunter-gatherer ancestors to survive.

In a study, researchers arranged for a man to violate the law by crossing the street against red light right into traffic. In half the instances, he was dressed in a business suit and tie. In the other half, he wore a work shirt and trousers. The study showed that three times as many pedestrians were swept along behind the man into traffic, against the light, and against the law, when he wore a suit.

The way a question or situation is framed can determine your response and lead to an action decided based on whether the options are presented with positive or negative connotations. Mixed with the narrative fallacy, framing can turn out dangerous for errors in decision making and might be used as power over others’ behavior.

A tendency to divide money into different pots and then treat them all separately based on subjective criteria. According to Richard Thaler, people think of value in relative rather than absolute terms. They derive pleasure not just from an object’s value, but also the quality of the deal – its transaction utility. The phenomenon helps explain why people are willing to spend more when they pay with a credit card than cash.

Ivan Pavlov’s learning procedure of pairing a stimulus with a conditioned response. The idea emerged from an experiment on Pavlov’s dogs demonstrating how the ring of a bell and the presence of a bowl of dog food (stimulus) would trigger an unconditioned response (salivation). Pavlov also came to notice that his dogs started to associate his lab assistant with food, creating a learned and conditioned response.

A method of learning through rewards and punishment. Such methods take place in many natural settings as well as in more structured settings such as the classroom or therapy sessions.

A tendency to want to be consistent with one’s prior actions. Because human actions, beliefs, and commitments help form self-perception, the commitment and consistency bias creates a reluctance to change a course of action once it’s chosen even though that action may be forced by someone else.

Linked to anchoring bias and commitment bias, the sunk cost fallacy is the tendency to continue an endeavor due to resources and effort invested in that endeavor even though cutting it loose seems to be a wise choice. Research suggests that rats, mice, and humans are all sensitive to sunk costs after they have made the decision to pursue a specific reward.

As Robert Cialdini puts it: It’s no surprise that people prefer to say yes to a request to the degree that they know and like the requester. A simple way to make things happen in your direction is to uncover genuine similarities or parallels that exist between you and the person you want to influence, and then raise them to the surface. That increases rapport.

A tendency to over-generalize a population or class of people. The concept is closely related to the availability heuristic.

The strive and desire for harmony, conformity, and compromise in a group can result in an irrational or dysfunctional decision-making outcome, although the opposite might be the purpose of creating the group.

The behavioral tendency to attribute greater weight and accuracy to the opinion of someone with an authority. This sometimes happens even when an individual believes that there’s something wrong with following the authority, and even when there wouldn’t be a penalty for defying them.

A tendency to settle on the first information or conclusion adopted for a given problem, thus remaining resistant to the search for any more alternatives.

The tendency to interpret a situation or seek out reinforcing evidence according to pre-existing beliefs. Charles Darwin is said to not have been able to come up with the theory of evolution without applying a constant process of destroying confirmation bias in his studies. He constantly sought out and noted observations that were opposed to what he thought and made an intense effort to investigate them.

Also called creeping determinism, it’s the tendency of overestimating one’s ability to have predicted an outcome that could not possibly have been predicted. Hindsight bias is dangerous because it hinders one from learning from past mistakes. If we feel like we knew it all along, it means we won’t stop to examine why something really happened.

A form of selection bias where the survivors—or the illuminated data—of a particular subject are disproportionately evaluated.

Once we learn something, we find it hard to imagine what it was like not to know it and thus find it difficult to think about problems from the perspective of lesser-informed people. The more knowledgeable you became on a subject, the more unnatural it becomes to communicate that idea in a simple and clear way. In short, knowledge itself becomes a barrier to its own propagation.

The need to treat non-linear complex systems as if they are linear. Mistakes generally arise from the mismatch between the complex reality one faces and the simplifying mental routines one uses to cope with that complexity.

People do what they’re incentivized to do. If someone is paying someone to be irresponsible, that someone is likely to be irresponsible. You generally get the outcome that you reward for. So you need to be very careful about how you design those rewards.

Consider the following: Linda is 31, bright, single, and outspoken. She majored in philosophy at the university. As a student, she was deeply concerned with issues of discrimination and social injustice, and also participated in antinuclear demonstrations.

Because we have a strong tendency to make sense from cause-and-effect, stories help us make sense of the world and are therefore remarkably powerful. But you could imagine the kinds of tripwires of errors this might cause. Just think back to the story of Linda in the prior model of representativeness heuristics.

Bizarre or controversial information is easier to recall than what is common.

Also known as a frequency illusion, this phenomenon is an illusion where once something has recently come to one’s attention, it suddenly seems to appear with improbable frequency shortly afterward, making one overestimate its prevalence. Closely related to selection and recency bias.

At the time of British rule of colonial India, the British government was concerned about the number of venomous cobra snakes in Delhi and so it offered a bounty for every dead cobra. The policy initially appeared successful. Eventually, however, the number of dead cobras being presented for bounty payment began to increase over time and it was discovered that people began to breed cobras for the income. When the government became aware of this, the reward program was scrapped, causing the cobra breeders to set the now-worthless snakes free. As a result, the wild cobra population further increased. The apparent solution to the problem made the situation even worse.

An unintended consequence of people being persuaded to do one thing but then turning around to the opposite. Sometimes referred to as the theory of psychological reactance, the boomerang effect basically occurs when individuals perceive that someone attempts to restrict their freedom.

Curiosity opens up for exploration, investigation, and learning. Without the human curiosity instinct, science and technology would not be present. Companies do not survive without curiosity.

Humans are born with an innate capacity for language and this capacity shows a lot about our cognitive organization. Steven Pinker sees language as an ability unique to humans, produced by evolution to solve the specific problem of communication among social hunter-gatherers.

Closely related to stereotyping, the human mind tends to generalize based on general rules from a sample set of data. But sometimes when the data does not fit the population, it leads to overgeneralization. As Daniel Kahneman puts it: Extreme outcomes (both high and low) are more likely to be found in small than in large samples. This explanation is not causal.

The tendency to determine one’s own level of satisfaction by comparing circumstances to others’ circumstances. Envy and jealousy are strongly caused by relative satisfaction. As Charlie Munger said: Envy is a really stupid sin because it’s the only one you could never possibly have any fun at.

Emmanual Kant’s ethical theory of fairness requires that, for an action to be permissible, it must be possible to apply it to all people without a contradiction occurring.

The tendency to overemphasize personal characteristics and ignore situational factors when judging others’ actions and behavior. It results in believing that what people do reflects who they are.

Waiting and watching is torture, so humans have a tendency to act even when no action is needed. The best decision is sometimes to watch the grass grow.

A theory postulating that animals, humans, and well-designed machines will naturally seek the path of least resistance, and that effort declines as the minimum acceptable result is attained.

The effect of simultaneously trying to believe two incompatible things at the same time. When people smoke even though they know it’s pretty bad for them, they experience cognitive dissonance.

We tend to overestimate our ability to do something hard and underestimate our ability to do something easy. And so we attempt to focus on what’s hard even though the thing that’s easy might bring the same, or larger, rewards. Related to the Dunning-Kruger effect.

The tendency to put too much emphasis on limited factors that do not matter much as part of a larger system. In other words, it’s when someone doesn’t see the forest for the trees. Daniel Kahneman once said: Nothing in life is as important as you think it is, while you are thinking about it.

The tendency to weigh recent information more heavily because that information seems more vivid even though it might be less important than past information. It’s closely related to the availability heuristic.

Tasks often take longer than expected. First proposed by Daniel Kahneman and Amos Tversky in 1979, the planning fallacy is an effect of optimism bias and is describing not only the underestimation of time but also of costs and risks.

As Warren Buffett says: It takes 20 years to build a reputation and 5 minutes to ruin it.

Coined by Nassim Taleb, a noise bottleneck is when more sampling of something decreases the signal-to-noise relation, increasing the amount of randomness, and decreasing the probability of sound conclusions. We tend to think that consuming more information is better except when that causes us to place too much emphasis on irrelevant data.

Closely related to the pari-mutuel system, a Keynesian beauty contest is a concept used to describe an action that is based not on one’s own perception but an inference of what one thinks the public perception will be of a subject. This can be carried one step further to take into account the fact that other entrants would each have their own opinion of what public perceptions are. Thus, the strategy can be extended to the next order and the next, and so on, at each level attempting to predict the eventual outcome of the process based on the reasoning of other rational agents.

Named after Frank Serpico, who became known for whistleblowing on police corruption in the late 1960s and early 1970s, the Serpico effect is the tendency to rationalize an action because everyone else is doing it.

A hypothesis stating that depressed people make more realistic inferences than non-depressed people. It’s the opposite of being blissfully unaware. While a useful mental model, the evidence for depressive realism is largely debated and remains a hypothesis.

People who are relatively good at one thing might tend to be relatively poor at another. An effect of trade-offs in deciding the time spent developing one skill over another.

The tendency to have more compassion for victims within small groups than larger groups, because the smaller the group the easier it is to identify individual victims. One victim can break our hearts while larger groups seem more distanced.

A Chinese proverb that underlines the tendency to accept absurd information as long as it is repeated enough times by enough people. If one person tells you there’s a tiger roaming around town, you might assume they’re lying. If two people tell you, you begin to wonder. If three say it’s true, you’re getting closer to believing it.

Coined after French philosopher Jean Buridan, Buridan’s ass is a type of decision paralysis where two equally good options lead to no decision.

The fear of being exposed as less talented than one’s surroundings think about one. Also termed impostorism, the phenomenon occurs when individuals feel they do not deserve all they have achieved.

Related to first-conclusion bias, the Semmelweis reflex is the tendency to reject new evidence or new information because it contradicts established norms, beliefs, or paradigms. It’s named after a Hungarian doctor named Ignaz Semmelweis who discovered that patients treated by doctors who wash their hands get fewer infections but struggled to convince others that his finding was true.

The tendency to erroneously believe that your views or beliefs are more widely held within a population than they are. This false consensus increases or decreases self-esteem, overconfidence effect, or a belief that everyone knows one’s own knowledge. Relation to the curse of knowledge.

Named after Robert McNamara, the US Secretary of Defense during the Vietnam War, it’s the belief that rational decisions are made solely on the basis of quantitative evidence, ignoring all other factors. McNamara measured success during the war solely on the measure of enemy body counts, causing the US army to lose track of the war’s strategic objectives. Don’t presume that what can’t be measured isn’t really important.

The resistance to giving an honest opinion due to a desire not to offend the person or organization responding to. A frequent example is of employees hesitant to giving an honest opinion to their superiors, clogging information flow for rational decision making in the company.

Identified by Nassim Taleb and described in The Black Swan, the ludic fallacy is the tendency to falsely associate simulations with real life. Because simulations are designed as “narrow worlds of game and dice”, they fail to account for chaos regarding future events in the real world.

The cognitive bias that can be observed when people with beginning-level competencies tend to overestimate their own abilities. The effect, documented by and named after psychologists David Dunning and Justin Kruger, is explained by the fact that at this level of understanding and competence, one has not yet learned to recognize the limits of one’s own competencies. Knowing the limits of one’s intelligence requires a certain level of intelligence.

The situation where a group decides to make a decision that is counter to the thoughts and feelings of its individual members in the group. It happens because the members fail to communicate their individual beliefs.

Related to the liking tendency, in-group favoritism is the inclination to give preference to people within your own social group. Nepotism is an example.

The tendency to exaggerate the positive image and importance of a group that one belongs to.

The tendency to believe threats and disasters are not at all probable due to a belief that things will remain as they always have.

The action of picking the target to go for after making the shot, making it impossible to miss. When the same data is used both to construct and test a hypothesis, conclusions are misguided.

A logical fallacy involving speakers attempting to convince an audience that they, and their ideas, are “of the people” and that they themselves are Average Joes.

Also called a smear tactic, it’s the act of presenting negative information that is irrelevant before presenting an argument, which makes that argument, or person, seem untrustworthy. Before you listen to what he has to say, may I remind you that he has been in jail.

An argument that attempts to prove a hypothesis true or false because the consequences of it being true or false are desirable or undesirable. It’s a logical fallacy.

The notion that human behavior, and its inherent biases, will always remain. As Voltaire said: History never repeats itself; man always does.

The tendency to resist putting in an effort to do something because of a worry that failing might put a dent in one’s self-esteem.

An attributional cognitive error of assuming that one’s qualities, traits, and personal attributes are unique when in reality they are not. In essence, it’s the opposite of imposter syndrome.

The tendency to enforce one’s existing beliefs about something when presented with disconfirming evidence. A study that looked at political voting showed that introducing people to negative information about their favored political candidate would often cause them to increase their support for that candidate.

A form of self-deception that causes individuals to think inflatedly about themselves, their decisions, and abilities to avoid short-term discomfort or raise self-esteem. A positive illusion might cause a negative spiral of justifications about worse and worse decisions.

The psychological process of attempting to suppress certain thoughts, making those thoughts more likely to resurface in one’s mind.

Named after Israeli-American mathematician Robert Aumann, it’s the notion that two rational people in an opposing argument can’t and shouldn’t come to the conclusion of agreeing to disagree if they have common knowledge of each other’s beliefs.

As ostriches bury their heads in the sand to avoid danger, the ostrich effect is the tendency to avoid opposing information to what one desperately wants to be right.

Limits to the capacity of the human mind make it impossible to contain and recall all information obtained, and therefore, rationality is also limited.

Related to the narrative fallacy, fluency heuristic is the tendency to believe more in ideas that are easy to explain rather than those that are hard to comprehend.

The act of blaming the bearer of negative news.

A law stated by writer Daniel Okrent referring to the phenomenon of the press providing legitimacy to unsupported fringe viewpoints in an effort to appear even-handed.

In 1868, German physiologist Karl von Vierordt created this law stating that humans perceive time at different magnitudes over different durations. We underestimate long periods of time and overestimate short periods of time.

Ward Cunningham, the creator of the first wiki, said: The best way to get the right answer on the Internet is not to ask a question. It’s to post the wrong answer.

A situation where a series of small, individually rational decisions creates a path dependence that might negatively alter the context of decisions made subsequently to the point where the original desire is irreversibly destroyed.

The tendency to show a higher preference for the reward that comes sooner rather than later. Humans discount future events. This is why we have interest rates.

The process an individual undergoes when resisting the temptation of an immediate reward in preference for a later reward.

A situation where an individual is being observed, but the very observation alters that individual’s actions. Merely observing a phenomenon inevitably changes the same phenomenon.

Related to the observer effect, performance tends to decline when supervisors, teachers, or bosses have low expectations of one’s abilities.

A motivational theory created by psychologist Abraham Maslow in a 1943 paper stating that humans have five categories of needs in order: physiological, safety, love, esteem, and self-actualization. Higher needs in the hierarchy emerge when the previous need is appropriately satisfied.

A social observation that people are less likely to help a victim when others are present as an audience. The greater the number of bystanders, the less likely is it that one of them will help.

Describes the positive expectation that an event will occur that has already been preceded by a consequence of the same event. Sports fans have a tendency to assume that a particular player having a streak of successful shots has an increased probability of making the next shot, irrespective of the player’s historical shooting record.

Also known as the Monte Carlo fallacy, it’s the mistaken belief that a run of specific results in a random process makes it less or more likely to occur the next time.

Power tends to corrupt, and absolute power corrupts absolutely.

The amount of energy needed to refute bullshit is an order of magnitude larger than to produce it.

People are more likely to engage in risky behavior when security measures have been mandated.

When a relative change in one quantity results in a proportional relative change in the other quantity. Few empirical distributions fit a power law for all their values but rather follow a power law in the tail. For example, the distribution of income in a market economy is following a power law because inequality is built into the process of wealth accumulation itself. Big cities people draw more people. Capital in corporations attracts more capital. Profits generate greater profit. The Pareto principle is a type of power law.

With permutations, we care about the order of the elements, whereas with combinations we don’t. The mathematics of permutations and combinations leads us to understand the practical probabilities of the world around us and is enormously important.

The study and manipulation of mathematical symbols or letters to demonstrate equivalence or inequivalence of subjects. Algebra is considered an essential part of any study within mathematics, science, or engineering, as well as such applications as medicine and economics.

Any number multiplied by zero, no matter how large, becomes zero. And yet, this is often learned the hard way. When trying to compound returns it’s fatal to multiply your capital by zero.

Randomness is present everywhere in the real world but it often doesn’t fit how we think about the world. An erroneous strive for pattern-seeking sometimes makes us see patterns that are not there. As Nassim Taleb puts it, we are “fooled by randomness”.

A family of random variables on the same probability space. Brownian motion and the random walk theory are stochastic processes.

Playing a negative-probability game persistently enough guarantees to go broke. Gambler’s ruin might also explain the case where a gambler goes broke even if he might have a positive expected value on each bet. This happens if the gambler raises the bet to a fixed fraction of the bankroll when winning, but doesn’t reduce it when losing.

A powerful force that happens when interest is regularly added to the sum which earned interest on the previous sum. Said to be called the “8th wonder of the world” by Albert Einstein, it’s a mathematical concept that lays the foundation for the field of finance but is clearly not bounded by the realm of finance itself. Knowledge, capability, ideas, relationships, and so on all build on the basis of compound interest. Naval Ravikant has said: Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.

Churn is a form of entropy. Basically, it’s the measure of the number of people or items moving out of a collective group over a specified period of time (think customers of insurance companies or subscription services). Reducing churn requires constant care of the group.

The law stating that the average of the results obtained from a large number of events should be close to the expected value of those events and will tend to become closer to the expected value as even more events occur. It was proved in 1713 by Swiss mathematician Jakob Bernoulli.

Statistical functions that describe all the possible values and likelihoods that a random variable can take within a given range. How the distribution of these values is laid out is dependent on its standard deviation, skewness, and kurtosis. The most common of these is the normal distribution—or bell curve—which is found frequently in finance, investing, science, and engineering.

If you add a large number of independent random variables, possibly with different probability distributions, but with finite variances, the sum will go towards a normal distribution.

The measure that explains to what degree a sample estimate might explain the true value of a parameter when tested on a population. It’s the range of values we are fairly sure our true value lies in. Not understanding the confidence interval is often what creates financial trouble.

The occurrence that happens when a number of observations follow the law of large numbers. If a random variable is extreme on its first measurement, regression to the mean suggests that it will be closer to the mean or average on its subsequent measurements.

A quantitative measure generally used to make very approximate comparisons. If two numbers differ by one order of magnitude, one is about ten times larger than the other.

In 1956, a young scientist at Bell Labs named John Larry Kelly Jr. came up with a simple formula for optimal bet sizing based on the better’s edge and odds of winning. It was essentially built on Claude Shannon’s information theory and Bernoulli’s St. Petersburg Paradox.

An effect where a curve initially falls, then steeply rises above the starting point.

A tendency to ignore the a priori probability of something by putting heavier weight on appealing information about an individual’s case. Only 6% of applicants make it into this school, but my son is brilliant. I’m sure they’re going to accept him!

Developed by statistician Francis Anscombe, Anscombe’s quartet is when presumably identical sets of numbers do not at all look identical when graphed. Numerical calculations are exact, but graphs are rough.

An experimental error that happens when sample data is not representative of the population as a whole.

A case where conditional probability and correlations are counterintuitive due to a sampling or selection bias.

A psychological phenomenon where random and meaningless impressions are perceived as meaningful. It’s a way to comfort the mind in explaining how the world works. To see patterns and connections when none are present is also called patternicity.

The tendency to disregard probability in decision making under uncertainty. Small risks are either neglected entirely or hugely overrated. Hindsight bias is a common result of the tendency to neglect probability.

Born from the field of thermodynamics, ergodicity is a case where population probabilities don’t apply to individual events but are evened out as time passes. One might not die from a single game of Russian roulette but will most certainly die if playing the game enough times.

The act of praising a person for a good deed they didn’t have full control over. As Nassim Taleb puts it: Avoid calling heroes those who had no other choice.

Most people have fewer friends than their friends have, on average. The reason is a type of sampling bias in which people with more friends are more likely to be one of your friends. In reality, the friendship paradox is a contradiction because most people believe that they have more friends than their friends have.

Falsely assuming that streaks or clusters of small samples in a large pool of data in random distributions indicate a non-random distribution.

Closely related to the Kantian fairness tendency, nonlinearity is a situation where there is not a straight-line or direct relationship between an independent variable and a dependent variable. The output is not proportional to the change of the input, posing to sometimes appear chaotic, unpredictable, or counterintuitive. A very important topic to understand.

A situation where the relationship between two variables depends on a third variable. If two objects are stuck together in thick and thin, that might be due to a third variable – glue.

Even though a $50 bill has the same value as 10 $5 bills, we tend to feel that the 10 bills are worth less. The denomination effect is also evident in the case of stock splits.

When frequent citation of previous information that lacks evidence misleads individuals into believing it’s evidence. As Daniel Kahneman puts it: A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth.

An empirical method of acquiring knowledge through systematic observation, measurement, and experiment, and the formulation, testing, and modification of hypotheses.

A variable that serves instead of an immeasurable other variable. The proxy must be close to the replaced value in order for it to be a good proxy.

A point on a curve at which the curve changes from being concave (concave downward) to convex (concave upward), or vice versa.

A case where a certain trend seems evident in different groups of data but is not evident when these groups are combined.

The amount of space that is outside of a solid object. If building a tank larger than it is, the amount of steel used to grow the tank will be able to hold more. It’s a non-linear relationship.

Known collectively as the extrema, maxima and minima are the highest and lowest points of value in a function. Pierre de Fermat was one of the first mathematicians to propose a general technique, adequality, for finding the maxima and minima of functions.

A method of assessing the stability of research results by changing conditions in each variable.

Describes how different figures are distributed as first figures in statistics. For example, Benford’s law states that the number 1 should be the first digit in 30.1% of the cases, the number 2 in 17.6% of the cases and the figure 9 in 4.6% of the cases in a very large amount of data.

Rare events that have a large impact are difficult to predict and are beyond normal estimates.

When a measure becomes a target, it ceases to be a good measure. When we set one specific goal, people will tend to optimize for that objective regardless of the consequences.

A tree-like visualization of how action leads to another series of possible consequences and outcomes. Algorithms are largely based on decision trees.

Probabilities are the rules of the world, and thus probabilistic thinking is one of the most critical traits and skills to adopt. But John Maynard Keynes also said: It’s better to be roughly right than precisely wrong.

Thinking in terms of effects and the effects of those effects. Second-order thinkers ask themselves the question; “and then what”?

The method of updating a probability estimate for a hypothesis as new evidence or information becomes available. It’s hugely in line with how the world works because Bayesian updating is closely related to subjective probability. It was named after Reverend Thomas Bayes.

Created by Benjamin Bloom in 1956, Bloom’s taxonomy is a set of three hierarchical orders of thinking of any subject in terms of levels. It consists of three learning domains: the cognitive, affective, and psychomotor, and it then assigns to each of these domains a hierarchy that corresponds to different levels of learning where each level subsumes the levels that come before it.

Moving out of one’s circle of competence is prone to blind spots that one is unaware of. Yet often, when one is not able to define or think about one’s circle of competence, it leads to the same degree of confidence as to when one is really operating within the circle of competence. This is dangerous.

The basic assumptions that can’t be deduced any further in a specific field. Aristotle defined first principles as; the first basis from which a thing is known. It’s the idea of breaking down complicated problems into its basic and only essential elements.

An imaginary experiment used to solve difficult problems and their potential consequences. The concept was very effectively used by Einstein to discover the theory of relativity by imagining traveling on a beam of light.

A thinking tool to get to the root of a problem by thinking of it in reverse. Carl Gustav Jacob Jacobi told his students that when looking for a research topic they should; invert, always invert.

Asking yourself 5 whys about a given subject is a great way to push yourself to find the truth and achieve rationality.

All else equal, Occam’s razor is the idea of preferring the theory with the fewest assumptions. Also called the parsimony principle, it’s a basic idea to all science and suggests to choose the simplest scientific explanation that fits the evidence. In terms of tree-building, this means that, ceteris paribus, the best hypothesis is the one that requires the fewest evolutionary changes.

Inspired by Occam’s razor, it’s a way of eliminating unlikely explanations for human behavior. Robert J. Hanlon said: Never attribute to malice that which can be adequately explained by stupidity.

If all you have is a hammer, everything looks like a nail. Also known as the law of the instrument. It’s a law because an instrument can pretty much only be used in one way to fulfill its purpose of creation.

Divergent thinking is the process of thinking by exploring multiple possible solutions in order to generate creative ideas. Convergent thinking is the process of figuring out a concrete solution to any problem. The key is to strike a balance.

The argument or thinking that the stuff of earlier times is inferior to that of the present, simply due to societal progress.

The illusion that when someone wants to make it seem like they’ve given a clear answer to a question or made a direct statement when actually they’ve said something inconclusive or vague. Words like “better”, “improved”, “gains” do not say how much in terms of a complete argument.

Economist Frank Knight argued that risk applies to situations where we don’t know the outcome of a situation but can measure its probabilities. On the other hand, uncertainty applies to situations where we can’t know all the information needed in order to set accurate probabilities in the first place.

The relationship between an object and a representation of that object is always abstract – like a map vs. the territory it represents. A person who has seen and heard descriptions of an apple, but has never tasted it, will not know how it tastes.

Closely related to the map-territory relation, it’s an aphorism in statistics commonly stating: All models are wrong, but some are useful. Attributed to statistician George Box, the thinking is considered applicable to all scientific models.

The fallacy of compromising two opposing views to land on the middle ground just because it’s the middle ground. For example, if one person says that all elephants can fly, another says that no elephants can fly, it’s a fallacy to agree that perhaps some elephants can fly.

Dwight Eisenhower, the 34th President of the United States, had to make tough decisions continuously about which of the many tasks he should focus on each day. And so he created the Eisenhower matrix to decide on and prioritize tasks by urgency and importance, sorting out less urgent and important tasks which he should either delegate or not do at all. He said: What is important is seldom urgent, and what is urgent is seldom important.

The study of systems, how they work, how they are related to larger systems, and how they break down or are prone to bottlenecks. It’s a disciplined approach for examining problems more completely.

First coined by Edward de Bono in 1967, it’s a method of thinking across otherwise irreconcilable dialectical disciplines and then arriving at solutions that cannot be arrived at via deductive or logical means. We might call this “thinking outside the box”.

Studying the past intensely to understand the present and the future because the past makes up the vast majority of events. Scottish historian Niall Ferguson has said: The dead outnumber the living 14 to 1, and we ignore the accumulated experience of such a huge majority of mankind at our peril.

When an important change occurs that replaces the usual way of thinking about or doing something.

A term related to both induction and deduction, where the researcher moves between theory and empiricism to gradually allow understanding to emerge.

Charlie Munger explains in the story of Max Planck and his chauffeur: I frequently tell the apocryphal story about how Max Planck, after he won the Nobel Prize, went around Germany giving the same standard lecture on the new quantum mechanics.

Blaise Pascal’s famous argument for believing in God. Pascal argued that it’s always a better “bet” to believe in God because the expected value of the gain to be achieved by believing in God is always greater than the expected value in the case of unbelief.

If something cannot be settled by experiment then it is not worthy of debate.

As a system or an organization performs more and more of the same type of work, it will tend to acquire efficiencies over time, but it might also acquire inefficiencies – like bureaucracy. When scale turns into an advantage, it’s due to positive feedback loops.

Also known as the 80/20 rule and as a form of power law, the Pareto principle states that, for many situations, roughly 80% of the situation’s effects come from 20% of the causes. It was developed by Vilfredo Pareto who showed that approximately 80% of the land in Italy was owned by 20% of the population.

In all productive processes, adding more of one factor of production will, ceterus paribus, at a certain point result in lower incremental per-unit returns. The law is existing because there are always constraints in the world. Too many cooks spoil the broth.

A way to solve a problem by way of termination. An algorithm consists of sets of rules to complete the task in a series of steps. An obvious example is a recipe.

Warren Buffett has said on the margin of safety: You have to have the knowledge to enable you to make a very general estimate about the value of the underlying business. But you do not cut it close. That is what Ben Graham meant by having a margin of safety. You don’t try to buy businesses worth $83 million for $80 million. You leave yourself an enormous margin. When you build a bridge, you insist it can carry 30,000 pounds, but you only drive 10,000-pound trucks across it. And that same principle works in investing.

If only one person is participating in a social network, that social network will have no value. Since network effects work in terms of returns to scale, the network’s value is driven by the number of users coming into the network. Sometimes, that turns into a winner-take-all scenario.

Popularized by Malcolm Gladwell, the tipping point is the point at which a product or trend goes viral – or turns into an epidemic. Gladwell introduces three variables that create the tipping point: the law of the few, the stickiness factor, and the power of context. A powerful mental model for how things gain traction in society.

A measure of the number of possible arrangements the atoms in a system can have. In other words, it’s a measure of uncertainty or randomness. Essentially, entropy is evident because of probability since there are only a limited set of ordered states in a system but an infinite amount of chaotic states.

Directly related to entropy, the second law of thermodynamics states that the total entropy of an isolated system will inevitably increase over time and will only remain still if all processes in the system are reversible.

As a restatement of the second law of thermodynamics, the principle of minimum energy states that for a closed system with fixed entropy, the total energy is minimized at equilibrium.

When the outcome of a system amplifies and reinforces the system itself in either positive or negative fashion. The output is rooted back as an input for the next stage. A great way to think about really difficult problems is to try and depict cause-and-effect relationships by connecting them in loops.

With George Soros as its primary proponent, reflexivity is a theory that feedback loops between expectations and economic fundamentals can cause price developments that substantially and persistently deviate from equilibrium prices. Soros’s theory of reflexivity runs counter to the ideas of economic equilibrium, rational expectations, and the efficient market hypothesis.

An extremely important mental model in which a perfect understanding of the individual parts in a system does not automatically convey a perfect understanding of the system’s behavior as a whole. Examples of complex adaptive systems include cities, large corporations, markets, governments, and so on.

Betting systems in which all bets are placed in a collective pool and payoff odds are calculated by sharing the pool among all winning bets after house take. A common example is horse race betting.

A phenomenon where a small change in an initial condition can have a huge effect in a future condition. The term comes from an analogy where a butterfly flaps its wings in Chicago and a tornado occurs in Tokyo.

When what is popular or perceived as better grows even more than what is less popular. Network effects feed on preferential attachment.

When the sum of something cannot be explained by simple additions of its components, e.g. when the sum is greater than the parts.

When a system or object is incapable of being reduced, diminished, or simplified further.

When a depletable resource is shared in a system where the individual users act in their own self-interest, it will tend to be depleted.

A system named after financier Sir Thomas Gresham where “bad money drives out good”. The law was originally based on how minted coins tended to decrease in terms of the amount of precious metals used in them.

Nassim Taleb, the originator of the term, said the following on antifragility: Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.

The concept of backup systems in engineering. It involves duplication of critical components or functions of a system with the intention of increasing its reliability, or robustness. A suspension bridge’s numerous cables are a form of redundancy.

The action of improving a system by removing elements from it. The paradox of choice states that more options can lead to poorer decisions. Via negativa is the solution.

The idea that non-perishable objects, ideas, or technologies are expected to live proportionally to their current age. If something has lived for X years, it can be expected to live for another X years. Because every additional period of survival implies a longer remaining life expectancy, expected mortality decreases with time.

A chain reaction where an initial reaction to an expected outcome turns to bigger reactions later in the chain because of a lack of complete information about expectations earlier in that chain.

Work expands to fill the time available for its completion. It was first coined by Cyril Northcote Parkinson in a humorous essay for the Economist in 1955.

When a problem is so difficult or impossible to solve that every participant attempting to solve it is basically shooting in the dark.

The a priori probability of an activity about to be done, e.g. the success rate of everyone who’s done what you’re about to try.

People tolerate unjust and inefficient systems if their personal incentives are aligned to defend or maintain it. The theory was initially proposed by John T. Jost and Mahzarin R. Banaji in 1994.

An adage cited as ninety percent of everything is crap. Quoted by science fiction author Theodore Sturgeon, it represents the belief that in general, the vast majority of the work that is produced in any given field is of low quality.

As a group increases its amount of members, individuals of that group tend to become increasingly less productive. It was named after French agricultural engineer Maximilien Ringelmann.

Max Planck said: A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die and a new generation grows up that is familiar with it.

Falsely assuming that the views and decision outcomes of a collective group reflect the view of each member in that group.

In a social media network, only 1 percent of users will actively create content; another 9 percent will participate by commenting, rating, or sharing the content; and the last 90 percent will watch, look and read without responding.

An observation by German mathematician Dietrich Braess who noticed that adding a road to a particular congested road traffic network would make traffic worse due to an increase in shortcuts becoming popular and overcrowded.

Also called the Nirvana fallacy, it’s a false dichotomy suggesting that a perfect solution exists to a problem and that courses of action should be rejected if just a small part of the problem remains.

Employees rise in an organization through promotion until they end in a position in which they are incompetent. A principle developed by Laurence J. Peter.

Species that have a pillar role in supporting an ecosystem or community. Without the presence of these foundational species, many other species in the ecosystem couldn’t sustain their existence. Coral is a foundational species in nature and the Federal Reserve is one in the world economy.

Google Sholar’s algorithm is an enhancer of preferential attachment since highly cited papers appear in top positions and gain more citations. Meanwhile, new papers hardly appear in top positions and therefore get less attention, regardless of their contribution to their fields.

If a 5% improvement in car fuel efficiency results in only a 2% drop in fuel use, it means there is a 60% rebound effect. The 3% discrepancy might be explained by driving faster or further than before.

All that can happen, will happen.

Social scientist Donald. T. Campbell has said: The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor.

In accordance with decision trees, history matters in terms of what options there are to decide on for the future. The set of decisions people face for any given circumstance is limited by the decisions they have made in the past. As explained through the tyranny of small decisions, path dependence might end up as an irreversible negative surprise if not properly applying second-order thinking.

When a third party is subject to the cost or benefit that it did not have any control over. Industry pollution is a negative externality that may affect the health of nearby residents. A positive externality might be an individual who maintains an attractive house that benefits the neighbors in the form of increased market values of their properties.

An open platform, or system, is one in which its contents or functionalities are able to be altered in other ways than the original creator of the platform intended. On the other hand, a closed platform is one which is “off the rack” – the creator keeps control over its contents.

The observation that the number of transistors on a microchip doubles roughly every two years while the cost of computers is halved. Experts agree that computers should reach the physical limits of Moore’s Law at some point in the 2020s because the high temperature of transistors would make it impossible to make smaller circuits.

The value of a communication system grows proportionally to the square of the number of users of the system (N²) – or, more precisely, with the rate: N(N-1).

A philosophy of governance introduced by Dr. Eliyahu M. Goldratt which helps and leverages organizations to achieve their goals. The title comes from the assertion that any manageable system is limited to achieving several of its goals by a very small number of constraints and that there is always at least one constraint.

Technology is overestimated in the short run and underestimated in the long run.

Contingent encouragers that motivate humans and animals to do certain actions. It’s based on the idea that people do what is in their own best interest. It might be extraordinarily difficult to discourage a behavior if that behavior is incentivized, and it might be equally difficult to encourage a behavior if it’s disincentivized.

An ecosystem is used to describe a complete environment in nature with all living organisms and non-living elements.

In ecosystems, a participant of the system might flourish more in a niche to which it is adapted than it would any other way. Closely related to the circle of competence.

The process by which organisms change over time as a result of changes in heritable physical or behavioral traits – or what is called phenotype. Developed by Charles Darwin in 1859, the theory is one of the best-substantiated in the history of science, supported by evidence from a wide variety of scientific disciplines.

When organisms, animals, or humans find a common good to work for, which is greater than the cooperators’ individual selfish benefits, they tend to cooperate towards that common good.

Individual self-interest may not favor cooperation.

Changes in the structure, function, or behavior of living organisms act in increasing their adaptation to the environment.

Species must continuously adapt and evolve to pass on genes to the next generation as well as to resist extinction when other opposing species are evolving. In the sequel to Alice’s Adventures in Wonderland, the Red Queen said to Alice: Now, here you see, it takes all the running you can, to keep in the same place.

The biochemical process of copying the DNA in a cell. It’s a prerequisite for successful cell division since each daughter cell needs a complete set of DNA to function.

People repeatedly return to their baseline level of happiness despite major positive or negative events or life changes. Expectations rise with results and the feeling of satisfaction is thus ever fleeting.

Pain and fear are integral parts of all living organisms, and self-preservation is the behavior that ensures their survival. Sigmund Freud proposed that self-preservation was one of two instincts that motivated human behavior, with the other being the sexual instinct. Later, he combined the two into eros.

Also known as the pleasure center, organisms’ reward center is made up of a group of neural structures that are responsible for incentive salience (the desire and craving for a reward), associative learning, and emotions such as joy, ecstasy, and euphoria. Sometimes, unhealthy addictions hijack our reward system if no discipline is exercised.

Evolution through natural selection allows traits that are originally meant for one purpose to enlist for a new main purpose.

Small doses of something can be good or beneficial for an individual but dangerous or deadly if applied at too large doses – e.g. alcohol or excessive exercise. It’s when less is more.

In the 1990s, anthropologist Robin Dunbar made a study on the correlation between primate brain size and average social group size. He found that it takes brainpower, specifically through the neocortex, to interact with other animals, to socialize and bond with them, and to remember past interactions. Dunbar then measured the human neocortex and estimated humans’ ability to maintain social relationships, concluding that they can handle around 150 contacts.

Models used to study and predict epidemics of infectious diseases, with the most commonly known being the SIR model. In their simplest form, epidemic models assume that a disease has a given infection rate and a given removal rate. How the epidemic develops is always a function of these two factors.

It’s easier to remember pleasant things than bad ones. Research indicates that the mind tends to focus on the optimistic at the subconscious level, while it tends to focus on the negative at the conscious level.

The belief that society is heading towards a decline by putting a stronger emphasis on the negatives in accordance with the Pollyanna principle. One remembers the past as better than it was and expects the future to be worse than it will likely be.

Underestimating the way behavior is largely affected by one’s mental state when an individual is not currently in that mental state. An individual currently feeling calm might find it difficult to predict how they will act if someone angers them.

Socrates thought no one intentionally does anything morally wrong. However, individuals have the ability to adapt their attitude to action. For example, people care less about cows’ well-being when they have just eaten beef jerky.

Empathy acts in transferring emotions from some individuals to others through observation. Happiness and misery love company.

Once species appear in the fossil record, they will become stable, showing little evolutionary change for most of their geological history.

Like emotional contagion, excitement and passion pull others into your orbit. Coined by Jason Roberts, he writes: The amount of serendipity that will occur in your life, your Luck Surface Area, is directly proportional to the degree to which you do something you’re passionate about combined with the total number of people to whom this is effectively communicated. It’s a simple concept, but an extremely powerful one because what it implies is that you can directly control the amount of luck you receive. In other words, you make your own luck.

The division into or support for a tribe or tribes, especially policies characterized by tribal loyalty. In conformity, tribalism can refer to a way of thinking or behavior in which one is more loyal to one’s tribe than to one’s friends, one’s country, or another social group.

Velocity is a vector size that describes how far and in which direction something moves per unit of time. The size (length) of this vector is the scalar known as speed. Going one step forward and one step back shows no velocity but shows speed.

The natural world allows no ruling frames of reference. When something is moving in a straight line at a constant speed with no acceleration, the laws of physics are the same for everyone. A man moving inside a train will not experience movement like an outside observer of the train would.

The energy needed to produce a certain reaction. The sparks that occur when steel is rubbed against flint provide the activation energy to initiate combustion in a Bunsen burner. The blue flame will sustain itself after the sparks have been extinguished because the continued combustion of the flame is now energetically favorable.

A catalyst is a substance that increases the rate of a chemical reaction without itself being converted or consumed by the reaction. A catalyst is therefore involved in a reaction but is neither a reactant nor a product.

Archimedes said: Give me a lever long enough and I shall move the world. Leverage is a very sensitive area since, depending on its application, its force might be incredibly powerful or incredibly devastating.

All things with a certain even rectilinear speed will continue to move in that direction until it is affected by an external force that causes it to either lose speed through negative acceleration (e.g. the braking effect in a car), increasing its speed through positive acceleration (e.g. giving a vehicle gas), or caused to change direction.

A sub-area of technical mechanics that describes the change in movement quantities (location, speed, and acceleration) under the influence of forces and also takes into account the mass of the moving body. Kinematics, on the other hand, describes the movement of a body (location, speed, acceleration) without taking into account forces or masses.

When a metal is combined with other substances, it can create a new metal with superior properties. The alloy may be stronger, harder, tougher, or more malleable than the original metal.

The inertia of a liquid, gas, or plasma – or its internal friction. Water is “thin” whereas honey is “thick”, which is why water has a lower viscosity than honey.

A concept arising frequently in thermodynamics, irreversibility means that the state of a system cannot be precisely restored to its initial state by infinitesimal changes in some property of the system without spending energy. Irreversible processes increase the entropy of the universe.

Any sufficiently advanced technology is indistinguishable from magic. And Clark’s fourth law: For every expert, there is an equal and opposite expert.

A classic mechanical device that can retain kinetic energy in rotation over a shorter or longer period.

The time elapsed before an exponentially decreasing size is halved. The concept is mainly applied to decay processes that are exponential, e.g., radioactive decay, or approximately exponential such as biological decay.

Certain pairs of physical magnitudes cannot be determined with arbitrary accuracy. The more accurately one can measure the momentum (or velocity) of a particle, the less accurately one can know its position, and vice versa.

According to ancient atomism, the world is made up of countless small particles, atoms, separated by voids. Atoms differ in shape and size and cannot be perceived through senses. They constitute the basic substance of the world and are, as the name implies, indivisible. When atoms are combined in different formations, the physical objects that constitute the phenomena of the sensory world arise. From an initially unstructured state, the world evolves gradually as a result of the random movements of atoms. Any explanation is thus strictly mechanistic and materialistic.

A chemical reaction in which an end product acts as a catalyst for the reaction. The continuous formation of this catalyst accelerates the reaction as long as sufficient starting materials are still available. It’s a positive feedback loop.

When something is defined in terms of itself. Recursion is used in a variety of disciplines, from linguistics to logic. The most common application is in mathematics and computer science, where a function is defined as applied to itself. Although this clearly defines an infinite number of instances (function values), it is often done in such a way that no loop or infinite chain of references can occur.

Electromagnetic force gives rise to most everyday phenomena, such as induction, friction, normal force (the force that prevents objects from flowing into each other), chemical reactions, and so on.

A physical theory that describes the properties and laws of states and processes in matter. In contrast to the theories of classical physics, it allows the correct calculation of physical properties in the size of atoms and smaller.

A formula for calculating transmission capacity over any communication channel. The law provides the theoretical maximum that can be achieved with a hypothetical optimal channel coding, without providing information about which method can be used to achieve this optimum.

A type of warfare in which two parties have different military capabilities or methods of war. In such a case, the weak party must take advantage of its special advantages or the opponent’s weaknesses in order to have any opportunity to achieve its goals.

A warfare where the warring parties are so strong that an end can only be reached through an extended and mutual depletion of each other’s resources. The winner becomes the one with the largest reserves.

Usually, parties prefer to fight on one front only since it makes it easier for them to concentrate on military efforts.

A small or narrow area that a larger number of soldiers cannot pass at the same time. They thus have a harder time attacking and can be more easily defeated by a less powerful enemy.

As one of the more extensive areas of asymmetrical warfare, counterinsurgency describes various tactics and strategies used to combat armed insurgency. Its the blend of comprehensive civilian and military efforts designed to simultaneously contain insurgency and address its root causes.

A strategic doctrine originally formulated by Robert McNamara in response to the Cuban crisis of 1962. The doctrine implies that if one of two parties to a conflict uses its nuclear weapons, it results in the destruction of both parties. It is based on theories of terror balance, which argue that powerful weapons are essential in the effort to deter the enemy from using the same weapons. As a consequence of the doctrine, the warring parties had to point the weapons at the enemy’s big cities.

Denotes an organized, armed struggle intended to influence or govern a state government. The states concerned will generally have an interest in classifying such movements as guerrilla movements. This implies that actions that are regarded as resistance struggles or freedom struggles on one side are regarded as armed rebellion and guerrilla movement on the other.

The act of using strategies or tactics that worked successfully in the past, but are no longer useful.

Contains elements of psychology and consists of convincing the opponent that an empty fortification is really full of hidden soldiers or traps which in turn induces the enemy to retreat.

A construction (literal or figurative) built solely to deceive others into thinking that a situation is better than it really is. It’s named after the Russian prince Grigorij Potemkin who, before the emperor Catherine II’s trip to Crimea in 1787, built theater decorations along her route depicting prosperous villages to give the impression that he had quickly achieved prosperity on the newly conquered peninsula.

A strategy in which a warring party is lured into letting in the enemy behind his defenses. Originally conceived by Odysseus.

A strategy that is intended to prevent a conflict from escalating into total war and to achieve this through a rapid operational victory.

A massive strategic attack on the political and military leadership structures of the opponent with the intention of eliminating or at least significantly reducing its ability to counterattack.

Bringing a large portion of one’s own force to attack small enemy units in sequence, rather than engaging the bulk of the enemy force all at once.

A strategy in which the opponent is enclosed by coordinated attacks around both flanks. If the military units carrying out the pincer ambush make contact with each other on the opposite side, the opponent is closed in and cannot retreat, but must strike out of the ring or get help from outside.

A strategy of using overwhelming power to try and achieve rapid dominance over the enemy.

Use of a decentralized force against an opponent in a manner that emphasizes mobility, communication, unit autonomy, and coordination/synchronization.

A strategy that allows an attacking force to reach the opposing rear guard by separating the defenders from their main defensive positions.

Sun Tzu argued that a brilliant general was one that could win without killing anybody.

A strategy in which the defending side places its units so that they gradually absorb the strength of an attacking enemy.

A semi-permanent or permanent defensive structure that gives physical protection to a military unit.

A strategy that aims to avoid field battles and frontal attacks by wearing out the opponent instead, e.g. through disruptions in logistics or by affecting morale. Used by warring parties who have time on their side or when there is no other alternative.

A tactic that consists of destroying buildings, factories, fields, and the like during a retreat. The purpose is to prevent them from falling into the hands of the enemy and thus contributing to its resources.

Continuous reinforcement of the military front until it has reached its full strength followed by an attack with the now-superior force.

The reluctance or unwillingness to exercise one’s right due to fear of legal sanctions. A common example is that of free speech.

A metaphor for any subject so controversial that it is “untouchable” in the measure that any politician or public official who dares to approach the subject, invariably suffers politically.

A form of political corruption that occurs when a government body, rather than acting in the interests of society, represents the commercial or special interests of a particular interest group (lobby) that dominates the industry or sector.

A type of systemic political corruption in which private interests significantly influence a state’s decision-making processes to its advantage.

Institutions will try to preserve the problem to which they are the solution.

A party’s obligation to present evidence of a claim in a conflict.

Legal systems characterized by the fact that courts have legislative function in the sense that they have the opportunity not only to interpret law but also create it through precedents.

Prior judgments, decisions, or rulings in a court of law used as a rule or guide in later cases or cases with similar circumstances.

A procedural legal principle according to which everyone has the right to certain minimum guarantees, aimed at ensuring a fair and equitable result in the process.

An obligation to pay certain attention and reasonable care required by law while performing any acts that could foreseeably harm others.

Also called bona fides, it denotes a party’s excusable ignorance of a particular relationship. What matters in this context is an assessment of what a sensible person would have done in the same concrete situation.

When something is caused by carelessness amongst specified circumstances.

The basic principle of criminal procedure that gives the person suspected of a crime the right to be regarded as innocent until the contrary has been proved. The principle is considered so important that many democracies have explicitly stated it in their laws or constitutions.

Evidence that is beyond reasonable doubt is the standard of evidence required to validate a criminal conviction in most prosecution systems.