202307181456 Status: #the-standards #lam-zett #🖤 Tags: #process #mental-models # Second-Order Thinking > _"Failing to consider second- and third-order consequences is the cause of a lot of painfully bad decisions, and it is especially deadly when the first inferior option confirms your own biases."_ > — [[Ray Dalio]] #quote ## Overview Second-Order Thinking is a mental model that involves thinking beyond immediate outcomes and considering the subsequent effects of decisions. This helps us understand the full impact of our actions and can result in better long-term decisions. Second-Order Thinking can be thought of as an extension/interpretation of [[Game Theory]]: understanding how others will act and react based on your next move. ## Examples 1. When a city decides to implement rent control to make housing more affordable, the immediate effect (first-order) may be lower rent. But the second-order effects may include landlords investing less in property maintenance or converting rental units into condos. 2. In ecology, introducing a non-native species to control a pest can have second-order effects. Initially, the pest population may decrease (first-order effect), but the non-native species might become invasive (second-order effect), disrupting the ecosystem. ## Further Reading - [Second-Order Thinking: What Smart People Use to Outperform](https://fs.blog/2016/04/second-order-thinking/) - [Principles: Life and Work by Ray Dalio](https://www.goodreads.com/book/show/34536488-principles) - [[Game Theory]]