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Every card for one document, both halves open. Nothing here is graded, scheduled or due — tick the ones that are still abstract and queue an example for each.

101 cards · 0 with examples
Models of Misalignment, Information, and Coordination
Q What is the core structural feature that defines asymmetric information problems?
A One side knows something the other cannot cheaply verify — the wedge is verification cost.
new asymmetric-information economics mental-models
Q What root condition causes the entire family of 'one side knows more' problems (adverse selection, moral hazard, signaling, etc.)?
A One party has information the other can't verify, so the informed side can quietly act in their own interest.
new information-asymmetry economics decision-making
Q In asymmetric information problems, why can an exchange degrade or collapse even before it happens?
A The uninformed party anticipates the informed party's private optimum will drift from the full-information outcome, so they price in this distrust — which can make the exchange unattractive or impossible.
new asymmetric-information adverse-selection verification-cost economics
Q In information-asymmetry problems, what two questions determine which specific problem you're dealing with?
A 1) Is the hidden thing already true, or will it happen later? 2) Who closes the gap — the informed side (signaling) or the uninformed side (screening)?
new information-asymmetry principal-agent economics signaling-screening
Q What is moral hazard, and what condition produces it?
A Being shielded from a risk's downside causes you to take on more of that risk.
new economics information-asymmetry moral-hazard incentives
Q When does 'cheap talk' (free, unverifiable words) actually carry real information?
A When the speaker's interests align with yours
new economics information-asymmetry signaling game-theory
Q In the 'unraveling' dynamic, why are lower-quality parties eventually forced to disclose their information even if they'd prefer not to?
A Because staying silent signals they are worse than whoever just disclosed — so silence becomes as damaging as a bad revelation, forcing disclosure down the entire quality ladder.
new information-asymmetry signaling game-theory unraveling
Q Why does using a metric as a target cause it to stop being a useful metric?
A People start gaming the metric itself, so it no longer tracks the underlying thing you care about.
new goodharts-law incentives measurement behavioral-economics
Q Why does rewarding a measurable stand-in often fail to achieve what you actually want?
A People chase the number rather than the real goal — any gap between the measure and the true objective gets exploited.
new incentives goodharts-law measurement behavioral-economics
Q What does Goodhart's Law state?
A When a measure becomes a target, it stops being a good measure.
new economics goodharts-law incentives measurement
Q What does Campbell's Law predict happens when a social metric is used to make high-stakes decisions?
A People distort the metric, making it an increasingly inaccurate measure of what it was meant to track.
new social-science incentives goodharts-law measurement
Q When a job has both measurable and unmeasurable parts, what happens if you pay only for the measurable parts?
A The unmeasurable parts get neglected — e.g., paying teachers purely on test scores crowds out curiosity, kindness, and judgment.
new incentives goodharts-law measurement unintended-consequences
Q What is the 'cobra effect,' and what does it illustrate about incentives?
A A colonial bounty on dead cobras caused people to breed cobras for profit, worsening the problem. It illustrates how a reward meant to fix a problem can make it worse.
new incentives cobra-effect goodharts-law unintended-consequences
Q What behavior does the ratchet effect describe in performance targets?
A People deliberately underperform to avoid next year's target being raised, since doing well this year makes future quotas harder.
new economics incentives goodhart organizational-behavior
Q What is rent-seeking, and why is it considered economically wasteful?
A Spending effort to grab a larger share of existing value (e.g., lobbying, lawsuits) rather than creating new value — the pie is redistributed, not grown.
new economics incentives rent-seeking goodhart
Q Why do organizations often pay CEOs dramatically more than their deputies, even when the difference in skill is modest?
A The large pay gap itself is the motivator — it incentivizes everyone below to compete hard for the top rank (a reward-the-rank contest).
new incentives principal-agent organizational-design goodhart
Q Why does everyone acting in their own self-interest sometimes produce a worse outcome for all?
A Because the chooser doesn't bear the full cost of their choice — costs (or benefits) spill onto everyone, so private incentives misalign with collective outcomes.
new economics externalities collective-action game-theory
Q In a prisoner's dilemma, why do both players end up worse off even when cooperation would benefit them both?
A Each player is individually tempted to defect regardless of what the other does, so both defect — producing a worse outcome than mutual cooperation.
new game-theory prisoner's-dilemma coordination incentives
Q In the 'tragedy of the commons,' why does a shared resource get depleted even when no individual intends to destroy it?
A Each person captures the full benefit of taking more, while the cost of depletion is spread across everyone — so self-interest consistently outweighs restraint.
new economics collective-action externalities game-theory
Q What structural feature causes the free-rider problem, and what does it result in?
A People can enjoy a shared benefit without paying for it, so the benefit gets underfunded.
new economics collective-action public-goods externalities
Q Why does policy tend to favor small special-interest groups over the broader public, even when the public bears the cost?
A The small group gains a lot and fights hard; the large group each loses only a little, so no one bothers to organize against it.
new political-economy collective-action externalities incentives
Q What is 'death by small decisions'?
A A series of individually reasonable choices that adds up to an outcome nobody wanted (e.g., a town losing its train service one canceled route at a time).
new collective-action externalities unintended-consequences
Q What does Braess's paradox state about adding capacity to a network?
A Adding a new road (or capacity) can make everyone's travel time worse, because individuals independently choose routes that collectively harm the whole system.
new game-theory network-effects braess-paradox coordination
Q In coordination problems, what is the key condition that allows everyone to successfully line up on the same outcome?
A There must be an obvious focal point that everyone can see — and everyone knows that everyone else sees it too (common knowledge).
new game-theory coordination common-knowledge focal-points
Q In the stag hunt coordination game, why do both hunters end up choosing the rabbit even though they'd both prefer the deer?
A Fear that the other will defect makes each play it safe — uncertainty about the other's commitment pushes both toward the worse-but-safer option.
new game-theory coordination stag-hunt behavioral-economics
Q In a coordination problem with no communication, what determines which option people converge on?
A Shared 'obviousness' — the option that feels like the natural focal point to everyone, not logical superiority.
new game-theory coordination focal-points
Q What is the difference between 'everyone knowing something' and 'common knowledge'?
A Common knowledge requires that everyone knows it AND knows that everyone else knows it — without this shared awareness, people may not act on what they privately know.
new game-theory coordination common-knowledge information
Q In the 'beauty-contest problem,' why don't you simply pick what you think is best?
A Because you're trying to pick what everyone else will pick — and they're all doing the same — so the game is about predicting collective expectations, not true value.
new game-theory coordination behavioral-economics beauty-contest
Q What causes an information cascade (herding)?
A People ignore their own private information and copy earlier choosers, so a crowd can lock onto an early — possibly wrong — decision.
new behavioral-economics information-cascades herding coordination
Q What causes a stable-looking social consensus to suddenly collapse after appearing rock-solid?
A People publicly conform while privately disagreeing; once a small crack lets everyone admit their true view, the false consensus collapses rapidly.
new social-dynamics coordination preference-falsification hidden-beliefs
Q In the context of social dynamics, what determines whether a movement (protest, trend, strike) takes off or fizzles out?
A Whether enough 'early joiners' participate to cross the critical mass threshold — below it, nothing happens; above it, rapid cascade follows.
new coordination tipping-points social-dynamics critical-mass
Q How can sharp neighborhood segregation emerge even when individuals only mildly prefer not to be a tiny minority on their block?
A Small individual preferences snowball through repeated moves, producing extreme collective separation that nobody specifically intended (Schelling's tipping-point effect).
new social-dynamics coordination tipping-points schelling
Q What is the Abilene paradox?
A A group does something none of its members actually wanted, because each person goes along assuming the others want it.
new decision-making group-dynamics coordination
Q What does the Overton window describe?
A The range of ideas that can be expressed publicly without being dismissed as crazy — and the effort to shift that range rather than win the current debate.
new political-theory coordination social-dynamics
Q What is the common mechanism behind all fixes for time-inconsistency problems (when you can't trust your future self or others)?
A Removing your own future options to make a promise credible
new game-theory commitment time-inconsistency behavioral-economics
Q Why can't a central bank's promise to avoid inflation be credible on its own, even if the bank sincerely means it?
A Once everyone believes the promise, breaking it becomes tempting (a little inflation looks beneficial) — so rational people anticipate the temptation and don't fully trust the promise in the first place.
new economics time-inconsistency credibility monetary-policy
Q A parts supplier builds a factory useful to only one carmaker. After the investment is made, what problem allows the carmaker to renegotiate and capture most of the value?
A The hold-up problem — once the supplier is locked in with nowhere else to go, the other party can exploit that dependency.
new economics game-theory commitment contracts
Q Why do incomplete contracts make ownership (rather than contract terms) so critical?
A Because contracts can't cover every future situation, the owner gets to decide all the unspecified cases — so whoever owns the asset controls the gaps.
new economics contracts property-rights principal-agent
Q Why does a general burning his ships make his army more effective in battle?
A Destroying the escape route makes the commitment to fight credible — the enemy knows retreat is impossible, so the threat to stand firm is believable.
new game-theory commitment-devices time-inconsistency strategy
Q What makes a threat credible rather than empty?
A You must actually want to carry it out when the moment comes — if following through would hurt you more than the other side, the threat isn't believable.
new game-theory commitment credibility time-inconsistency
Q What makes brinkmanship an effective negotiating tactic?
A It works precisely because the shared danger is genuine — a credible risk that the other side will back down to avoid.
new game-theory commitment negotiation time-inconsistency
Q Why does the prospect of repeated future dealings help solve commitment and cooperation problems?
A Fear of being punished in the next interaction makes people cooperate now — reputation acts as a substitute for binding contracts.
new game-theory commitment cooperation repeated-games
Q What is present bias, and why does it cause problems like procrastination and undersaving?
A We heavily favor rewards right now over larger rewards later — making the present feel disproportionately valuable compared to the future.
new behavioral-economics present-bias decision-making cognitive-bias
Q Why can't a group's decision-making simply be treated as the choices of one rational person scaled up?
A The method of combining individuals (voting rules, promotion systems, communication structure) shapes outcomes in ways no individual member would produce alone.
new group-dynamics decision-making social-choice systems-thinking
Q What does Arrow's theorem prove about voting systems?
A Any method of converting individual rankings into a group ranking must violate at least one basic fairness rule — there is no perfect system.
new voting social-choice arrows-theorem group-decision-making
Q What does the Condorcet paradox reveal about majority preferences?
A A group can prefer A over B, B over C, and C over A simultaneously — so 'what the majority wants' can be an undefined loop, not a clear answer.
new voting social-choice condorcet-paradox group-decision-making
Q Why do competing political parties (and rival products) tend to converge toward similar positions over time?
A The median voter effect: competitors drift toward the middle to capture the preference of the decisive centrist voter/customer.
new political-economy game-theory voting coordination
Q What does the 'iron law of oligarchy' predict about organizations?
A Even organizations founded to be democratic tend to drift toward control by a small inner group.
new political-science organizational-behavior group-dynamics
Q What does the Peter Principle predict about why organizations fill up with incompetent people?
A People are promoted for excelling at their current role until they reach a role they're bad at — where they stay.
new organizational-behavior management peter-principle
Q What does Parkinson's Law state?
A Work expands to fill the time available for its completion.
new organizational-behavior productivity predictable-failures
Q What does Conway's Law predict about the products an organization builds?
A Organizations build products that mirror their own communication structure — poorly connected teams produce poorly connected components.
new conways-law organizational-behavior systems-thinking
Q Why does a group spend more time debating a trivial issue than a complex, high-stakes one?
A Because everyone feels qualified to weigh in on the simple issue, while few feel competent to challenge the complex one — so discussion concentrates on what's easy (bikeshedding).
new decision-making group-dynamics bikeshedding organizational-behavior
Q What is regulatory capture?
A An agency created to oversee an industry gradually ends up serving that industry instead, because the industry supplies the experts, staff, and future job opportunities.
new economics political-economy regulatory-capture incentives
Q What makes 'allies of convenience' politically stable, even when the allies have opposing values?
A Two groups with different motives both benefit from the same rule — so they jointly defend it, even without coordinating.
new political-economy group-dynamics incentives
Q What is the root cause of 'secretly filtered data' problems (e.g., survivorship bias, Simpson's paradox)?
A The examples you see have been filtered by a process tied to the very thing you're studying — so your sample isn't representative, even with honest data collection.
new statistics cognitive-bias sampling epistemology
Q A WWII analyst recommended adding armor where returning planes had the most bullet holes. What was the flaw in this reasoning?
A Survivorship bias: the damaged spots on returning planes were survivable hits. Planes hit elsewhere never returned, so those were the spots that actually needed armor.
new survivorship-bias cognitive-bias filtered-data statistics
Q After an unusually poor performance, a person tends to do better next time — even without any intervention. What statistical phenomenon explains this?
A Regression to the mean: extreme results are partly due to chance, so they're naturally followed by more ordinary ones.
new statistics cognitive-bias survivorship-filtered-data regression-to-mean
Q A hospital shows that Treatment A has a higher survival rate than Treatment B in every age group separately, yet Treatment B shows a higher overall survival rate. What phenomenon explains this reversal?
A Simpson's paradox — a hidden grouping variable (age) distorts the combined totals, reversing the pattern seen in each subgroup.
new statistics simpsons-paradox data-bias survivorship
Q What mechanism causes Berkson's paradox to create a spurious relationship between two unrelated variables?
A Selecting a sample based on an outcome (e.g., hospitalization) means both unrelated variables can get someone into the sample, making them appear negatively correlated even though they aren't in the general population.
new statistics sampling-bias berksons-paradox filtered-data
Q A disease affects 1 in 1,000 people. A test for it is 99% accurate. You test positive — what cognitive error leads people to assume they probably have the disease?
A Base-rate neglect: ignoring how rare the disease is means most positives are still false alarms, but the impressive accuracy figure overwhelms that reasoning.
learning cognitive-biases base-rate-neglect probability statistics
Q What cognitive/methodological error does the 'streetlight effect' describe?
A Looking where it's easy to look rather than where the answer actually is
new bias epistemology data-sampling streetlight-effect
Q In a competitive auction where no one knows the true value of an item, why does winning often turn out to be bad news?
A The winner is typically whoever overestimated the value the most — so winning signals you probably overpaid.
new economics information-asymmetry auctions winner-curse
Q What are the three engines that drive 'feedback' problems (Theme 8: When Things Feed Back on Themselves)?
A 1. Success breeds success (early leads lock in) 2. Tightly linked parts (small faults cascade) 3. Rare extremes dominate (averages mislead)
new systems-thinking feedback-loops mental-models complexity
Q Why does an early, inferior choice sometimes become permanently dominant over better alternatives?
A Lock-in (path dependence): once enough people adopt a standard, switching costs make it too costly to change, freezing the early choice in place regardless of quality.
new economics path-dependence lock-in feedback-effects
Q What mechanism causes 'the rich get richer' effect, and why does an early lead persist?
A An early lead compounds on itself (cumulative advantage): small initial advantages attract more resources, attention, or citations, which produce further advantages — locking in early winners regardless of whether they were the best.
new feedback-loops cumulative-advantage path-dependence economics
Q Why do network effects tend to produce 'winner-take-most' markets?
A Each new user makes the network more valuable, so larger networks attract even more users — compounding the leader's advantage.
new economics network-effects feedback-loops
Q What is the Red Queen effect, and why is it named after an Alice in Wonderland character?
A You must keep improving just to stay in the same place, because rivals improve too — like the Red Queen who runs but stays put. Seen in arms races, cybersecurity, and predator-prey evolution.
new game-theory feedback-loops competition economics
Q Why do agricultural markets tend to produce boom-bust price cycles?
A Producers base output decisions on last year's price: high prices → overproduction → glut → price crash → underproduction → shortage → price spike, repeating in a cycle.
new economics feedback-loops cobweb-theorem market-dynamics
Q What is the 'rebound effect' (Jevons paradox), and why does it undermine efficiency gains?
A Efficiency improvements lower the cost of use, so people use more — offsetting the expected savings (e.g., fuel-efficient cars lead to more driving, so total fuel consumption barely drops).
new economics feedback-loops unintended-consequences jevons-paradox
Q What makes 'normal accidents' normal — i.e., why are serious accidents considered inevitable in certain systems?
A When a system is both highly complex and tightly coupled, failures cascade in ways that can't be fully anticipated or prevented — accidents are built into the system's structure.
new systems-thinking risk feedback-loops normal-accidents
Q What is 'normalization of deviance,' and what systemic risk does it create?
A Each time a safety shortcut is taken without immediate consequence, it quietly becomes the new normal — eroding safety margins until disaster strikes (e.g., Challenger shuttle).
new systems-thinking safety feedback-loops organizational-behavior
Q What does the Swiss cheese model explain about how complex accidents occur?
A Accidents happen when holes in several independent layers of protection happen to line up simultaneously — no single layer is perfect, so failures require multiple defenses to fail at once.
new systems-thinking risk feedback-loops complex-systems
Q Why does 'average-based' thinking fail when analyzing outcomes dominated by rare, high-impact events like market crashes or pandemics?
A Because a few extreme outliers (black swans) shape outcomes far more than all ordinary events combined, making the average a misleading summary of risk.
new ⧉ same passage statistics black-swans feedback-systems risk
Q Why does 'average-based' thinking fail when analyzing rare, high-impact events like market crashes or pandemics?
A Because rare extremes (black swans) dominate outcomes, making the average a misleading summary — the story is in the tails, not the middle.
new ⧉ same passage statistics black-swans feedback-systems risk
Q What makes human cognitive biases especially dangerous beyond just causing errors?
A They are consistent and predictable — which makes them easy to exploit.
new cognitive-bias behavioral-economics decision-making
Q Why do people take odd risks just to avoid a loss, even when the expected value doesn't justify it?
A Loss aversion: losing something hurts ~twice as much as gaining the same amount feels good, so avoiding losses is disproportionately motivating.
new behavioral-economics loss-aversion cognitive-bias prospect-theory
Q What is the endowment effect?
A People value something more simply because they own it — demanding more to give it up than they would have paid to acquire it.
new behavioral-economics cognitive-bias decision-making
Q What is anchoring, and why does it work even when the initial number is arbitrary?
A A starting number pulls your final estimate toward it — even if irrelevant. E.g., seeing '$1,000 original price' makes $600 feel like a deal, even if the item is worth $400.
new cognitive-bias anchoring behavioral-economics decision-making
Q Why do countries with opt-out organ donation have far higher donor rates than opt-in countries, even with the same populations?
A Because the default option wins — people tend to stick with whatever is pre-selected, regardless of their actual preferences.
new ⧉ same passage behavioral-economics framing defaults cognitive-bias
Q Why do countries with opt-out organ donation have far higher donor rates than opt-in countries, even with the same populations?
A The default option wins — people tend to stick with whatever is pre-selected, regardless of their actual preferences.
new ⧉ same passage behavioral-economics framing defaults cognitive-bias
Q Why does continuing to invest in a failing project because of past spending represent a reasoning error?
A The money already spent is gone regardless — only future costs and benefits should drive the decision.
new cognitive-bias sunk-cost decision-making behavioral-economics
Q What is moral licensing?
A Doing something good makes you feel entitled to then do something bad (e.g., 'I exercised today, so I can eat whatever I want').
new behavioral-economics cognitive-bias moral-licensing
Q What is ambiguity aversion, and how does it differ from ordinary risk aversion?
A Preferring a known probability (e.g., a 50/50 coin flip) over an unknown-odds gamble — even when the unknown gamble might actually be better.
new cognitive-bias decision-making behavioral-economics
Q In evolutionary game theory, what is the biological equivalent of a Nash equilibrium?
A A strategy that, once common in a population, cannot be beaten by any newcomer (reached by natural selection rather than reasoning).
new game-theory evolution equilibrium evolutionary-stable-strategy
Q In the hawk-dove evolutionary game, why doesn't the population end up as all hawks, even though being the only aggressive individual pays off?
A A world of pure aggressors is ruinous — hawks fighting each other suffer high costs, so the population stabilizes at a mixed equilibrium of aggressive and cautious strategies.
new game-theory evolutionary-biology equilibrium
Q In evolutionary game theory, what is the biological equivalent of reciprocal cooperation ('you scratch my back, I scratch yours')?
A A strategy selected by survival because it increases reproductive fitness — the same logic as human cooperation, but driven by natural selection rather than reasoning.
new evolutionary-game-theory cooperation reciprocity biology
Q The nine problem themes in this framework each represent a failure of one 'too-perfect assumption.' What are these baseline assumptions that reality violates?
A Everyone has the same information, wants the same things, keeps their promises, thinks clearly, data is a fair sample, and nothing changes over time.
new mental-models systems-thinking decision-making
Q In the checklist of 'things that predictably go wrong,' which root question points you toward Theme 1 (information asymmetry problems)?
A "Who knows more than whom?"
new information-asymmetry principal-agent mental-models decision-making
Q What is the diagnostic question to identify reinforcing/rewarding the wrong thing?
A What am I rewarding — and is it the same as what I want?
new incentives goodharts-law rewarding-wrong-thing
Q In the framework of 'things that predictably go wrong,' which theme is identified by the question: 'Whose costs or benefits get decided privately but shared by all?'
A Theme 3: Private choices, shared costs (externalities)
new economics externalities mental-models decision-making
Q In the framework of 'things that predictably go wrong,' which theme applies when the right move depends on what others expect others to do?
A Theme 4: Coordination problems (everyone waiting on everyone else)
new ⧉ same passage game-theory coordination mental-models
Q In the framework of 'things that reliably go wrong,' what is the root cause of coordination failures — where the right move depends on what others expect others to do?
A Everyone agrees on the desired outcome but can't align, because each person's best action depends on what they believe others will do (and what others believe they will do).
new ⧉ same passage coordination game-theory decision-making social-dynamics
Q In the framework of 'things that predictably go wrong,' which theme is triggered by the question: 'Will this promise still be worth keeping when the moment comes?'
A Theme 5: Trusting the Future (can't trust your future self or theirs — time inconsistency and commitment problems)
new game-theory time-inconsistency commitment mental-models
Q What is the core mistake that Theme 6 ('Groups Don't Act Like People') warns against?
A Treating a group as if it were one sensible person — combining individuals creates outcomes none of them would have on their own, shaped by the structure used to combine them.
new group-dynamics decision-making systems-thinking
Q In the checklist of 'things that reliably go wrong,' what type of problem should you suspect when you ask: 'How did this data get in front of me, and who's missing?'
A Secretly filtered data (survivorship bias, sampling bias, etc.) — Theme 7
new cognitive-biases statistics survivorship-bias epistemology
Q In the framework of predictable failures, what two core questions define Theme 8 (feedback and dynamics)?
A Does the current state feed back into how things change — and where do the rare extremes hide?
new systems-thinking feedback-loops mental-models complexity
Q In the nine-theme framework for 'things that predictably go wrong,' what diagnostic question identifies Theme 9 (human cognitive biases)?
A Is the person's own mind misfiring in a predictable direction?
new cognitive-biases mental-models decision-making heuristics
Q What is the core insight of the Lucas Critique?
A Historical data records behavior under old rules. Change the rules, and people adapt — so old data no longer reliably predicts behavior.
new economics lucas-critique policy incentives behavioral-change
Q What is the four-step structure by which a new rule predictably destroys the pattern it was designed to exploit?
A 1. Stable pattern exists in historical data → 2. Rule is designed based on that pattern → 3. People optimize against the rule (not the underlying goal) → 4. The pattern dissolves or inverts
new goodharts-law lucas-critique incentives policy-design
Q Why does any sufficiently consequential rule tend to get gamed, even without malicious intent?
A Because people are active agents who optimize within their environment — they treat rules as constraints to navigate, not as goals to serve. Change the rules, change the behavior.
new incentives lucas-critique goodharts-law behavioral-economics
Q When designing a rule or policy, what key question should you ask to anticipate unintended consequences?
A "What would a clever, self-interested person do in response to this?"
new lucas-critique incentives policy-design goodharts-law