Charlie Munger - LatticeWork

Charlie Munger is known for his unique approach to decision-making, which he calls “latticework of mental models”. This approach involves building a mental framework that consists of various models from different disciplines, which can be used to make better decisions.

“You must know the big ideas in the big disciplines, and use them routinely - all of them, not just a few. Most people are trained in one model - economics, for example - and try to solve all problems in one way. You know the old saying: To the man with a hammer, the world looks like a nail. This is a dumb way of handling problems.”

The idea of latticework can be traced back to the 19th century philosopher Alfred North Whitehead, who believed that the best way to understand complex ideas was to break them down into smaller, more manageable pieces. Munger expanded on this idea by advocating for a multidisciplinary approach, where one draws on insights from multiple fields to solve problems.

Benefits

One of the benefits of the latticework approach is that it allows for a more nuanced and comprehensive understanding of the world.

“You must have the models and you must have the knowledge. You must also have the wisdom to use them properly.”

By combining different models and knowledge from different fields, one can gain a broader perspective and make better decisions.

Munger also stresses the importance of understanding the limitations of each model and being able to apply them appropriately. As he puts it, “The first rule is that you’ve got to have multiple models - because if you just have one or two that you’re using, the nature of human psychology is such that you’ll torture reality so that it fits your models.”

Another key aspect of the latticework approach is the ability to think in probabilities. Munger emphasizes the importance of understanding the odds and using them to make better decisions. As he puts it, “The best thing a human being can do is to help another human being know more.”

Inversion

Inversion involves looking at a problem from a different perspective by considering what not to do. Munger believes that this approach can help avoid making mistakes, stating,

“It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent.”

Continuous Learning

Continuous learning is another important aspect of the Latticework, with Munger stating, “I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.”

“What you need is a latticework of mental models in your head. And, with that system, things gradually fit together in a way that enhances cognition.”

Latticework of models

“You’ve got to have models in your head. And you’ve got to array your experience ‑ both vicarious and direct ‑ on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head.” -Charlie Munger