9 Mental Models That Will UPGRADE Your Decision-Making

Most people think they make rational decisions.

They believe their judgments are sound.

They assume their thinking is clear and objective.

And they're completely wrong.

I just finished re-reading "Thinking Fast and Slow" by Daniel Kahneman for the third time, and I'm still finding ways my brain screws me over daily.

The truth is uncomfortable:

Your brain is a machine built for efficiency. Not accuracy.

It takes shortcuts. It jumps to conclusions. It falls for illusions.

And the worst part? You don't even notice it happening.

These mental blindspots are predictable patterns that affect everything from your relationships to your finances to your career.

The good news?

Once you see these patterns, you can't unsee them. And that awareness gives you an unfair advantage in a world where most people remain oblivious to how their minds actually work.

Let's break down 9 principles from Kahneman's work that I've found most useful in upgrading my own decision-making:

1. SYSTEM 1 VS SYSTEM 2

Your brain operates on two distinct systems:

System 1: Fast, automatic, emotional, unconscious

System 2: Slow, deliberate, logical, conscious

Every day, I watch people destroy relationships, blow negotiations, and make terrible decisions because they don't recognize which system is running the show.

Last month, I was in a heated argument with my partner about some random BS. My immediate reaction (System 1) was to say something about him "always doing this… blah blah"

But I caught myself. Instead, I:

1. Took a deep breath and counted to ten

2. Asked for a five-minute timeout to collect my thoughts

3. Returned to the conversation focused on the actual issue, not my emotional reaction

The result was that we found a compromise in minutes rather than having a fight that would have lasted days.

Where this shows up in real life:

• That email you fired off in anger (and immediately regretted)

• The impulse purchase you made without checking your budget

• The quick judgment you made about someone before knowing the full story

Quick implementation: Next time you feel your emotions rising, physically say "System 1" out loud. This simple pattern interrupt gives System 2 a chance to take the wheel.

2. LOSS AVERSION: WHY YOU HATE LOSING MORE THAN YOU LOVE WINNING

Here's a strange truth:

The pain of losing $100 feels roughly twice as strong as the pleasure of gaining $100.

This asymmetry explains so much irrational behavior:

• Why you hold onto losing investments too long

• Why you stay in situations that no longer serve you

• Why "Don't miss out!" is more compelling than "Here's what you'll gain!"

I recently wanted to cancel a subscription I rarely use. My rational mind knew I should get rid of it, but I kept thinking, "What if I need it someday?" Classic loss aversion. The potential "loss" of capability outweighed the very real gain of cash and space.

How brands use this against you:

1. "Last chance!" sales create artificial urgency

2. "Limited edition" products feel irresistible

3. "Don't lose your progress!" hits harder than "Keep making progress!"

How to use this ethically:

• When pitching ideas, emphasize what people stand to lose by not adopting your approach

• Create genuine urgency with time-limited opportunities

• Position your unique value in terms of what can't be found elsewhere

3. ANCHORING BIAS: THE FIRST NUMBER WINS

In any negotiation, the first number mentioned becomes the psychological anchor around which the entire discussion revolves.

This is why salary negotiations are so tricky. If you're offered $50,000 but were hoping for $70,000, you might feel like you've "won" by settling for $55,000 – even though you're still $15,000 short of your target.

I used to fall for this constantly until I realized that letting the other person set the anchor was costing me thousands.

Now, when negotiating:

1. I research thoroughly beforehand to establish fair market value

2. I aim to be the first to mention a specific number (setting my own anchor)

3. I justify my position with concrete evidence of value

The same principle applies beyond money. In conversations, the first framing of an issue often determines the entire discussion that follows.

Real-world application: Next time you're in a negotiation, prepare your anchor point in advance and look for ways to introduce it early in the conversation.

Be bold. The research shows that slightly ambitious anchors work best.

4. AVAILABILITY HEURISTIC: WHY THE NEWS IS RUINING YOUR RISK ASSESSMENT

After a plane crash makes headlines, people cancel flights - even though they'll drive to their destination instead, which is statistically much more dangerous.

Your brain judges risk based on how easily examples come to mind, not on actual probability.

This explains why we:

• Fear shark attacks more than heart disease

• Worry more about terrorism than car accidents

• Panic about rare side effects more than common ones

I noticed this in myself during COVID. Early in the pandemic, I was obsessively tracking every headline about otherwise healthy young people getting seriously ill. This availability of frightening examples made me overestimate my personal risk, even when the data showed otherwise.

To make better probability judgments:

1. Look at actual statistics, not just memorable examples

2. Consider base rates and long-term trends

3. Ask, "Is this actually common, or just commonly reported?"

Quick win: When facing a decision involving risk, consciously ask yourself, "Am I being influenced by recent headlines or dramatic stories?" Then seek out the actual data.

5. FRAMING EFFECT: SAME FACTS, DIFFERENT DECISIONS

Imagine two doctors:

Doctor A tells patients a procedure has a "90% survival rate." Doctor B tells patients the exact same procedure has a "10% mortality rate."

Same information, drastically different patient responses.

The framing effect explains why marketing copy matters so much:

• "95% fat-free" sounds healthier than "5% fat"

• "Save $50" feels better than "Pay $450"

• "Join 10,000 others" works better than "Be one of 10,000"

I've started noticing how this affects my own decision-making. When my investment app shows me I'm "up 15% this year," I feel great. When the same app shows me I'm "down 8% from my peak," I feel terrible – even though both statements could be simultaneously true.

To overcome framing bias:

1. Consciously reframe information in the opposite direction

2. Look for the underlying data behind persuasive claims

3. Ask, "What information isn't being highlighted here?"

Practical tip: When someone presents you with a statistic, immediately translate it into its complement. "90% success" becomes "10% failure." This simple flip often reveals hidden perspectives.

6. ENDOWMENT EFFECT: WHY IT'S HARD TO LET GO

We overvalue things simply because we own them.

That's why:

• Sellers think their homes are worth more than buyers do

• You can't let go of clothes you haven't worn in years

• You stick with losing investments too long

I've been clearing out my bedroom, and I'm embarrassed by how many things I've held onto that I never use – just because they're "mine."

The endowment effect is super dangerous with investments. You might hold onto a losing stock because you can't bear to sell at a loss, even when reinvesting elsewhere could recoup your losses faster.

To combat this bias:

1. Regularly audit your possessions and investments objectively

2. Ask, "Would I buy this again today at the current price?"

3. Calculate the opportunity cost of holding underperforming assets

Challenge to try: Identify one thing you're holding onto right now primarily because it's already yours. Now imagine you're considering buying it for the first time at its current market value. Would you still want it?

7. PLANNING FALLACY: WHY YOU'RE ALWAYS BEHIND SCHEDULE

"I'll definitely finish this by Friday!" – Said every optimist ever on Monday morning.

The planning fallacy is our persistent belief that we'll complete tasks more quickly than we actually do – despite all historical evidence to the contrary.

I see this in myself constantly. Every article I write, every trip I plan, every home project I start – almost without exception, they take longer than I expect.

After tracking my estimates versus actual completion times for a few months, I discovered I typically underestimate by about 40%. Now I automatically add that buffer to any timeline I create.

To make better time estimates:

1. Break large projects into smaller, measurable tasks

2. Use historical data from similar past projects

3. Consider what could go wrong and build in contingencies

4. Whatever time you think it'll take, add 50%

Simple trick: When estimating time for anything important, write down your gut instinct, then multiply it by 1.5. Use this adjusted figure as your actual planning estimate.

8. CONFIRMATION BIAS: HOW YOU TRICK YOURSELF INTO BEING RIGHT

We naturally seek information that confirms what we already believe and dismiss evidence that contradicts our views.

This is why political discussions often go nowhere. Both sides are selectively filtering information to support their existing positions.

I noticed this recently when researching a health supplement. I realized I was enthusiastically reading positive reviews while dismissing negative ones as "probably user error" or "outliers." Once I caught myself, I forced a more balanced evaluation.

To counter confirmation bias:

1. Follow smart people you disagree with

2. Question your existing beliefs: "What evidence would change my mind?"

3. Celebrate being wrong – it means you just got smarter

4. Assign someone to play devil's advocate in important decisions

Growth challenge: Pick a strongly held belief and spend 30 minutes sincerely trying to find evidence against it. The discomfort you feel is the growing edge of your thinking.

9. CURSE OF KNOWLEDGE: WHY EXPERTS MAKE TERRIBLE TEACHERS

Once you know something, it's nearly impossible to remember what it was like not to know it.

This explains why:

• Experts struggle to teach beginners

• Clear instructions are so rare

• Miscommunication happens despite good intentions

I face this whenever I try to explain complex concepts to others. What seems obvious to me is completely foreign to them. I've learned to constantly ask, "Is this making sense?" and to watch for nonverbal cues of confusion.

To break the curse of knowledge:

1. Use analogies to familiar concepts

2. Communicate at a 5th-grade level (without being condescending)

3. Ask clarifying questions: "What part lost you?"

4. Have someone unfamiliar with the topic review your explanations

Communication hack: After explaining something important, ask the other person to explain it back to you in their own words. The gaps in their understanding reveal where your communication failed.

FROM AWARENESS TO ACTION

Knowing these biases exist isn't enough. The real challenge is catching them in the moment, when they're actively influencing your decisions.

I've found three practices particularly helpful:

1. Decision journaling: For important choices, write down your reasoning, predictions, and the information you're using. Review these entries later to see which biases affected your thinking.

2. The pre-mortem: Before finalizing a big decision, imagine it's one year later and the decision was a disaster. What went wrong? This surfaces blind spots and counteracts overconfidence.

3. The outside view: Ask, "How have similar situations typically played out for others?" This pulls you out of your unique circumstances and gives you statistical perspective.

To clearer thinking,

Simi

P.S. The most dangerous biases are the ones you haven't identified yet. Forward this to someone whose thinking you respect and ask which bias they struggle with most. Their answer might surprise you both.