Thursday, September 20, 2018

Only the Big Ideas #3 — Biology, Comp. Sci., Bias, Systems Thinking

Surfacing big ideas from big disciplines
10 mental models this week. Read on below for the articles and mental model definitions:
  • Technical Debt
  • Occam’s Razor
  • Antifragility
  • Refactoring
  • Power Laws
  • Preferential Attachment
  • Sensitivity to Initial Conditions
  • Effort Justification
  • Endowed Progress Effect
  • Systems Thinking

a16z — Biology, the New (Old) Technical Debt… and What That Means for Healthcare Innovation

Technical debt is a concept in programming that reflects the extra development work that arises when code that is easy to implement in the short run is used instead of applying the best overall solution. (TechnopediaCarnegie Mellon)
When presented with competing hypotheses to solve a problem, one should select the solution with the fewest assumptions (Wikipedia)
put another way: There are two parts that are considered the basis of Occam’s razor:
  • The Principle of Plurality — Plurality should not be posited without necessity
  • The Principle of Parsimony — It is pointless to do with more what is done with less (Howstuffworks)
Anti-fragile systems love randomness and uncertainty; going beyond resilience or robustness, they get stronger with stress and volatility (Harvard Business Review)
a change made to the internal structure of software to make it easier to understand and cheaper to modify without changing its observable behavior (Martin Fowler)

New York Times — Is Justin Timberlake a Product of Cumulative Advantage?

a relationship between two things in which a change in one thing can lead to a large change in the other, regardless of the initial quantities (Farnam Street)
put another way: a functional relationship between two quantities, where a relative change in one quantity results in a proportional relative change in the other quantity, independent of the initial size of those quantities: one quantity varies as a power of another (Wikipedia)
When a new node joins a network, it is more likely to connect to a conspicuous, high-degree node than an obscure, low-degree node. In other words, the rich get richer and the hubs get hubbier (Quanta)
This is in contrast to fitness, which is a “fit-get-richer” effect, whereby the ability of individuals in a population to acquire a given quantity is determined by intrinsic qualities. (Joint estimation of preferential attachment and node fitness in growing complex networks)
A system’s sensitivity to initial conditions refers to the role that the starting configuration of that system plays in determining the subsequent states of that system. When this sensitivity is high, slight changes to starting conditions will lead to significantly different conditions in the future. Sensitive dependence on initial conditions is a defining property of chaos in dynamical systems theory. (Santa Fe Institute)

The Ikea Effect

Effort justification is a person’s tendency to attribute value to an outcome, which they had to put effort into achieving, greater than the objective value of the outcome (Wikipedia)
The endowed progress effect is the idea that if you provide some type of artificial advancement toward a goal, a person will be more motivated to complete the goal (Zapier blog)

Bloomberg — The Crisis Was in the System

A school of thought that focuses on recognizing the interconnections between the parts of a system and synthesizing them into a unified view of the whole (The Systems Thinker)

Thursday, September 13, 2018

Only the Big Ideas #2 — Blockchain, Physics, Biology, Economics

Surfacing big ideas from big disciplines
11 mental models this week — read on below for the articles and definitions:
  • Information asymmetry
  • Adverse selection
  • Mr.Market
  • Moats
  • Aggregators
  • Platforms
  • Network Effects
  • Ecological Niche
  • Fundamental Attribution Error
  • Attractors
  • Entropy

ICOs and Economics of Lemon Markets

This occurs in transactions where one party has more or better information than the other.
This asymmetry creates an imbalance of power in transactions, which can sometimes cause the transactions to go awry, a kind of market failure in the worst case (WikipediaWorld Bank)
Strategic behavior (selective participation) by a more informed participant in an exchange against the interest of the less informed participant(s)(How Adverse Selection Affects the Health Insurance Market)
put another way: [this] describes an undesired result due to the situation where one party of a deal has more accurate and different information than the other party. The party with less information is at a disadvantage to the party with more information (Investopedia)
[Benjamin] Graham believed stock market fluctuations were irrational and generally based on greed and fear. He invented the hypothetical character of Mr. Market as a parable to demonstrate his philosophy (ValueWalk)
put another way: participants in the stock market are humans subject to the corroding influence of emotions.
Investors are frequently given to bouts of over-optimism and greed, which causes stock prices to be bid up to very high levels. These same investors are also vulnerable to excessive pessimism and fear, in which case, stock prices are driven down substantially below intrinsic value (Morningstar)

Stratechery — The Moat Map

Warren Buffett, the chairman of Berkshire Hathaway, has emphasized over the years that he looks for businesses with sustainable competitive advantages.
He suggests that buying a business is akin to buying a castle surrounded by a moat. Buffett wants the economic moat around the businesses to be deep and wide in order to fend off all competition.
He goes a step further by noting that economic moats are almost never stable. Moats either get a little bit wider or a little bit narrower every day. (Measuring the Moat — Michael Mauboussin)
Aggregation is fundamentally about owning the user relationship and being able to scale that relationship; these businesses have all three of the following characteristics
  • Direct relationship with users
  • Zero marginal costs for serving users
  • Demand-driven multi-sided networks with decreasing acquisition costs (Stratechery)
Aggregators attract end users by virtue of their inherent usefulness and, over time, leave suppliers no choice but to follow the aggregators’ dictates if they wish to reach end users (Stratechery)
Platforms, though, while established through product leadership, flourish and sustain themselves by empowering and entrusting developers to build something so compelling that customers fall in love with not just the hardware but the experience that runs on top of it. In short, they require sharing the customer relationship (Stretechery)
Platforms need 3rd parties to make them useful and build their moat through the creation of ecosystems (Stratechery)
A network effect (a.k.a. demand-side economies of scale) occurs when a product or a service becomes more valuable to its users as more people use it (a16z)

Melting Asphalt — Ecological Thinking

A species’ niche is its ecological role or “way of life,” which is defined by the full set of conditions, resources, and interactions it needs or can make use of. Each species fits into an ecological community in its own special way and has its own tolerable ranges for many environmental factors (Khan Academy)
Our tendency to explain others’ behavior in terms of their character (or other internal factors), rather than taking into account external (situational) factors (Edge.orgWikipedia)
put another way: Modern scientific psychology insists that explanation of the behavior of humans always requires reference to the situation the person is in. The failure to do so sufficiently is known as the Fundamental Attribution Error….overestimating the role of traits and underestimating the importance of situations (
In dynamical systems, an attractor is a value or set of values for the variables of a system to which they will tend towards over enough time, or enough iterations (Santa Fe Institute)
put another way: a state toward which a system tends to evolve, for a wide variety of starting conditions of the system (Wikipedia)
put one more way: The inherent properties of complex adaptive systems make the exact trajectories of these systems unforeseeable. However, since the systems unfold into a common direction, we can say something about the qualities of the milestones toward which these systems navigate. Attractors configure the evolution of complex adaptive systems. Since attractors are the most stable and robust elements in these systems (Science Direct — Exposing the attractors of evolving complex adaptive systems by utilising futures images: Milestones of the food sustainability journey)

Entropy Explained, With Sheep

Entropy is just a fancy word for ‘number of possible arrangements’. Entropy is a count of how many ways you can rearrange the ‘insides’ of a thing (its microscopic internals), while keeping its ‘outwardly’ (macroscopic) state unchanged.
The odds of seeing entropy decrease are effectively zero, not because any physical law compels it to be so, but because of sheer statistics — there are overwhelmingly more ways for the energy to be spread out than there are ways for the energy to be contained.

Friday, September 7, 2018

Tuesday, September 4, 2018

Only the Big Ideas # 1 — Complexity, Game Theory, Computer Science, Economics

Welcome to Only the Big Ideas #1 — Surfacing big ideas from big disciplines
  • Prisoner’s Dilemma
  • Tragedy of the Commons
  • Nash Equilibrium
  • Bounded Rationality
  • and more..
  • Complexity
  • Resilience
  • Self-organization
  • Marginal utility
  • Utility
  • Scarcity
  • Abstraction
  • Pipelining
  • Loops