Short List of Munger’s Models
- Math (Munger is particularly fond of the algebraic idea of inversion, that is, to solve a problem you address it backwards)
- Accounting (and its limits)
- Engineering (according to Munger, the ideas of redundancies and break-points are applicable outside of engineering and can be applied to business)
- Economics
- Probability
- Psychology (specifically the cognitive biases that cause us to make terrible decisions)
- Chemistry
- Evolutionary biology (can provide insights into economics)
- History
- Statistics
Long List of Munger’s Models
- Accounting
- Balance Sheet
- Cash Flow Statement
- Depreciation
- Double-Entry
- Generally Accepted Accounting Principles
- Income Statement
- Sunk Cost
- Biology:
- Genetics
- Natural Selection
- Physiology
- Business:
- Moats
- Five Forces
- Brand
- Chemistry:
- Autocatalytic reactions
- Bohr Model
- Kinetics
- Thermodynamics:
- Uncertainty Principle
- Viscosity
- Computer Science:
- Abstractions
- Algorithms
- If-statements
- Recursion
- Economics:
- Agency Problem
- Asymmetric Information
- Behavioral Economics
- Cumulative Advantage
- Comparative Advantage
- Competitive Advantage
- Creative Destruction
- Diminishing Utility
- Economies of Scale
- Elasticity
- Externalities
- Markets
- Marginal Cost
- Marginal Utility
- Monopoly and Oligopoly
- Network effects
- Opportunity Cost
- Price Discrimination
- Prisoner’s Dilemma
- Public and Private Goods.
- Specialization
- Supply and Demand
- Switching Costs
- Transaction Costs
- Tragedy of the Commons
- Time Value of Money
- Utility
- Engineering:
- Breakpoints
- Feedback loops
- Margin of Safety
- Redundancy
- Law:
- Burden of Proof
- Common law
- Due Process
- Duty of care
- Good Faith
- Negligence
- Presumption of Innocence
- Reasonable doubt
- Management Science:
- Occam’s razor
- Parkinson’s Law
- Process versus Outcome
- Mathematics, Probability and Statistics:
- Agent Based Models
- Bayes Theorem
- Central Limit Theorem
- Complex Adaptive Systems
- Correlation versus Causation
- Combinations
- Compounding
- Decision Trees
- Inversion
- Kelly Optimization Model
- Law of Large Numbers
- Mean, Median, Mode
- Normal Distribution
- Permutations
- Power Law
- Regression Analysis
- Return to the Mean
- Scaling
- Sensitivity Analysis
- Philosophy, Literature and Rhetoric:
- Metaphors
- Similes
- Abduction
- Pragmatism
- Realism
- Reductionism
- Physics:
- Critical Mass
- Electromagnetism
- Equilibrium
- Inertia
- Newton’s Laws
- Momentum
- Quantum Mechanics
- Relativity
- Shannon’s Law
- Thermodynamics