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You have models everywhere.
When you work, when you think, you use models.
You have models in mathematics, of course, you have
models in physics, in science they are called theory.
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But there are models.
You have model in psychology like the MBTI, or what
I said about left and right brain, it's a model.
It's all about simplifications.
You have models in philosophy.
A lot of models.
Plato, Aristotle, Kant, they all build design, proposed models.
Models is the, the, the brick of the thinking.
It's the element, it's what you use all the time.
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Under control, is something.
It means did you decide to build the model in your mind or it's there, simply.
Now I have the matrix, and you know as a consultant we like matrix.
So, let's put some names on the, on the four quadrants.
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It's called knowledge.
If you have studied accounting, of chemistry, or what
you want, everything you study, it's a decision you take,
it's a simplify, you organize, but it's there for a
long period of time, and we can call this knowledge.
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The second quadrant on the left, but below, is a bit different.
Strong, resistant, really
they are permanent, but you never decide really to implement.
It's just there.
So, it's the world of beliefs, of beliefs, values, religions.
Those are strong simplifications.
If you don't know exactly where they do
come from, but it plays a role, defin, definitely.
What's a value?
Again, we need a clear definition.
Let's propose this one.
A value is an idea you have that something should, and I like this definition
because it's simple, it's brilliant because it means we can disagree on value.
You think that, I think that, we simply disagree.
But this quadrant plays a role, of course, because they are mental models,
strong resistance and they influence the others.
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Probably number one and two knowledge and believes
okay your family, your but representation, that's exactly.
Those are mental models.
Very fragile.
Five minutes ago, they were not there, two minutes from now they want to disappear.
But, mental models we build all the time to
explain ourselves what we have in front of us.
To give some coherence, some sense to this,
the landscape what you have in front of you.
In front of you in a restaurant.
There is a table nearby with four persons.
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Whether you decide or not, you will try to understand who's who.
He must be the boss, he must, you give an
explanation to yourself, and it's not possible not to do it.
Let's take another example.
You listen to the radio and you hear, this company has purchased this company.
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Immediately, you explain to yourself why, with your explanation.
yes.
You have course this man, this product, it must happen.
You explain to yourself.
This is called representation, and it's very important to
realize how, how powerful they are in the thinking process.
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Number four, as a quadrant, you have on the right of
the side, you have, of course, the world we are in now.
With you.
For the next lectures too, the world of finance.
It's the world.
It's like the workings of, the working area.
That's where we process, we think, we look, we test, we try.
We...
It's like a lab.
It's a lab for new models.
It's there where you look for new strategies and you're looking for it.
It's a lab.
Maybe the better definition, it's a lab.
And of course, the goal is when for a lab to produce
a [SOUND] concept somebody, and given time everybody accepts,
and at that time it goes to the other side of
the axis and it becomes knowledge and strategy and so forth.
So it's just my way to organize the world of models.
But you will see in the next lectures,
how, and why this, the number three, the representations,
are so important, because, in a way, they
are really relevant when you talk about cognitive bias.
In the black swan, I haven't mentioned.
But you have cognitive bias.
What's a cognitive bias?
You have dozens of books on cognitive bias in
the two last years about why our genius sometimes wrong.
And the book of Canaman, fast thinking and slow thinking, you have dozens of books.
They all about cognitive bias.
What is a cognitive bias?
It's like a piece of reasoning which will
tend to believe it is strong, and it's not.
And cognitive bias are explained a lot by representation.
But I will say that in more details in the lecture number four.
So, it's enough for today.
Let's summarize.
Let's summarize.
Probably, and at the same time, let's connect
this lecture number two to the lecture number one.
Luc de BrabandereProfessor at Ecole Centrale Paris
