Morgan Housel

Palladian Park - Constraints

Mental Remodeling

Everyone, everywhere, at some point in their lives, has believed something that was wrong. This isn’t new. People used to think the Earth was flat. Or that the Earth was the center of the universe. Or that bloodletting was an effective medical practice. And so on.

Forming an incorrect belief isn’t a defect in humanity. But holding onto that belief is.

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Palladian Park - Constraints

Second-Order Thinking

Most people are adept at first-order thinking, able to anticipate the immediate effects of their actions. It’s a basic skill we must develop in adolescence. First-order thinking is simple and quick. There are sometimes benefits to speed in decision-making. But it’s immensely limiting, and often counterproductive, to move swiftly without much regard for direction. That’s why we need second-order thinking.

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Palladian Park - Constraints

Fees and Fines

Fees are the cost of getting something; fines are penalties for doing something wrong. The distinction between the two is important because both fees and fines provide feedback loops that influence our behavior. When we get them confused, we stop doing that which might actually benefit us.

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Palladian Park - Constraints

It’s Okay to Want More

There’s a common misperception that wanting more is bad. We are told to be happy with what we have and to realize all the blessings in our lives. While it’s good to practice gratitude, simply being content is not the answer. If we don’t want more, we lack ambition and stagnate. Stagnation, whether personal, professional, or other forms, is bad too. Like most things in life, we have to balance the dichotomy of wanting more and being thankful for what we have.

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The Decision-Making Process: More Than Just Outcomes

The quality of our decisions significantly impacts our lives. Good decisions keep us out of trouble while bad decisions mire us in misery. Or at least that’s the common perception. Like most things in life, it’s more complicated than that. Judging the quality of a decision requires more effort than just observing the outcome. Good decisions can yield undesirable outcomes and bad decisions can produce desirable ones. Some factors that we must consider when judging a decision are the amount of information we had at the time of the decision, the quality of that information, the decision making process, likelihoods of certain outcomes, and, of course, luck.

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Palladian Park - Constraints

How to Effectively Use Role Models

Using role models effectively can fast-track our personal growth. We are social creatures who learn from our tribe members; when we see others who are successful, we strive to emulate them in the hopes that we too can experience success. Conversely, we shy away from what the troubled members do for fear of falling into their same misfortunes. But like anything, we can take this practice too far.

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