October 2017

The Proxy War We’re Fighting -Mental Model 026


A variable that is not in itself directly relevant, but that serves in place of an unobservable or immeasurable variable.


Example: Per capita GDP is used as a proxy of standard of living. Birth country is used as a proxy for race. And Body Mass Index is a proxy for actual body fat percentage.


Another type of proxy is a proxy war. For example, in Ukraine there is fighting between the Ukrainian army and Russian-backed separatists. Their conflict, is a proxy war between the NATO alliance (the west) who back Ukraine and Russia who back the separatists, who provide them with funding, weapons and training.  


Wisdom: “Nature will not be admired by proxy.” — Winston Churchill


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The Monte Carlo Fallacy -Mental Model 025

The Monte Carlo Fallacy

The mistaken belief that if something happens more frequently than normal during some period, it will happen less frequently in the future.
Or that if something happens less frequently than normal during some period, it will happen more frequently in the future.


Example: At the Monte Carlo Casino on August 18, 1913, the ball fell on black 26 times in a row. While this is statistically an extremely rare event, it is no rarer than any other the other 67,108,863 possible sequences of red and black.


Gamblers at the Monte Carlo lost millions of francs betting against black, incorrectly thinking that the streak was causing an ‘imbalance’ in the randomness of the wheel, and surely it had to be followed by a long streak of red.


Aka: Gambler’s Fallacy, Fallacy of the Maturity of Chances


Wisdom: “I am not in the position to sacrifice the necessary in the hope of winning the superfluous.” ― Alexander Pushkin


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When Measurement Hides Information -Mental Model 024

Heisenberg Uncertainty Principle

The more precisely the position of a particle is determined, the less precisely its momentum can be known, and vice versa.


Example: Imagine measuring the speed of a car using light. Light is made up of photons (tiny bits of light). When you shine the light on a car, you are pushing photons onto the car. In theory, the momentum of the photons would affect the momentum of the car and change the speed. In reality, it is like a truck running into a mosquito—it has little effect.

We use light photons to measure individual particles. Unlike a car, a particle is tiny. So when the photon in used to measure the position of a particle, the momentum of the photon significantly affects the momentum of a particle. It’s like a motorbike running into a car. So when we measure the position of a particle, we cannot simultaneously measure its speed.


Wisdom: “It is better to be roughly right than precisely wrong.” ― John Maynard Keynes


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