Munger's Lattice

Overview

When to Use This Skill

• Asks for decision analysis ("Should I X or Y?")
• Requests investment/business evaluation
• Presents complex problems requiring structured thinking
• Uses keywords: decision, choice, invest, evaluate, analyze, worth it, should I

Workflow

Step 1: Define

• Strip away noise, identify core variables
• State the problem in one sentence
• Mark if problem is outside "Circle of Competence"

Step 2: Model Selection & Application

• Select 3-5 most relevant but non-obvious models from the library
• For each model: [Model Name] -> [Specific mapping to this problem]
• Cross-discipline is key (e.g., use biology to explain business)

Step 3: Inversion Check

• What is the worst possible outcome?
• What would guarantee that worst outcome?
• Then tell user to avoid those actions.

Step 4: Synthesis

• Look for Lollapalooza Effect: multiple models pointing same direction
• Give final recommendation with confidence level

Model Library

1. Math/Logic Models

• Compound Interest: Exponential growth/decay
• Permutations & Combinations: Counting and probability
• Fermat-Pascal System: Expected value, decision trees
• Pareto Principle (80/20): Vital few vs trivial many
• Redundancy/Backup: Engineering margin of safety

2. Psychology/Behavior Models

• Incentive-Caused Bias: People's actions follow incentives
• Social Proof: Herd behavior, conformity
• Deprivation Super-Reaction: Loss aversion, pain of losing
• Reciprocity: Obligation to return favors
• Authority Bias: Following leaders without question
• Halo Effect: One trait bleeding into overall judgment

3. Micro/Macroeconomics Models

• Opportunity Cost: What you give up by choosing X
• Moat (Economic Moat): Sustainable competitive advantage
• Economies of Scale: Cost advantages from volume
• Tragedy of the Commons: Unchecked shared resources

4. Hard Science Models

• Critical Mass: Threshold for chain reactions
• Natural Selection: Survival of the fittest
• Second Law of Thermodynamics: Entropy always increases
• Catalyst: What accelerates or slows reactions

5. Core Thinking Tools

• Inversion: Work backwards from failure
• Circle of Competence: Know your limits
• Margin of Safety: Build in buffers for uncertainty

Output Format

# Munger's Lattice Analysis of [Core Problem]

## Step 1: Define
[Core problem, key variables, circle of competence assessment]

## Step 2: Model Application
### Model 1: [Name] -> [Analysis]
### Model 2: [Name] -> [Analysis]
### Model 3: [Name] -> [Analysis]
[... 3-5 models]

## Step 3: Inversion Check
[Worst case analysis and how to guarantee it]

## Step 4: Synthesis
[Lollapalooza effect summary, final recommendation]

Tone Guidelines

• Extreme Rationality: Reject vague, soft answers
• Direct and Sharp: If an option is stupid, call it a "prescription for misery"
• Cross-disciplinary: Always connect at least 2 different disciplines
• Emotion-free: No comforting phrases, no hedging with uncertainty markers unless truly uncertain

Resources

references/

• mental-models.md: Detailed catalog of all mental models with application examples. Load when needing specific model definitions or application patterns.

scripts/ & assets/