Adverse Selection is a market failure that occurs when information asymmetry causes the less desirable participants in a market to be more likely to engage in transactions, driving out the more desirable participants. First formally described by George Akerlof in his 1970 "Market for Lemons" paper (for which he received the Nobel Prize), it explains why used car markets, insurance markets, and hiring can systematically fail to function efficiently.
BATNA (Best Alternative to a Negotiated Agreement) is the most favourable outcome a party can achieve if negotiations fail and no deal is reached. Developed by Roger Fisher and William Ury in *Getting to Yes* (1981), it is the single most important concept in negotiation theory — determining your walk-away point, your negotiating power, and whether any proposed agreement is worth accepting.
The Bystander Effect is the social psychological phenomenon in which individuals are less likely to offer help to a victim when other people are present. The more bystanders witness an emergency, the less likely any individual is to intervene — due to diffusion of responsibility ("someone else will handle it") and pluralistic ignorance ("no one else is reacting, so maybe it's not serious"). First documented by John Darley and Bibb Latané following the Kitty Genovese murder in 1964.
Robert Cialdini's six principles of influence — Reciprocity, Commitment and Consistency, Social Proof, Authority, Liking, and Scarcity — are the foundational framework of persuasion psychology, developed from three years of field research and documented in *Influence: The Psychology of Persuasion* (1984). Each principle describes a deeply embedded mental shortcut that humans use to decide whether to comply with a request, and each can be ethically applied to communication, sales, leadership, and negotiation.
A Collective Action Problem arises when all individuals in a group would benefit from cooperation, but each individual has a rational incentive to free-ride on others' contributions. The result is systematic under-provision of public goods and over-exploitation of shared resources. Documented in Mancur Olson's *The Logic of Collective Action* (1965), it explains why unions struggle, environmental protections fail, and international agreements collapse — and how they succeed when they do.
Coordination Problems are situations where multiple equilibria exist and participants benefit from coordinating on the same one — but coordination is difficult because there's no single dominant choice. Driving on the left or right side of the road, choosing communication standards, establishing meeting times, and setting social norms all require coordination without a pre-ordained solution. Schelling's focal points, communication, and conventions are the primary mechanisms that resolve them.
Dunbar's Number is the cognitive limit on the number of stable social relationships a human brain can maintain simultaneously — approximately 150, with nested layers of 5, 15, 50, and 150. Proposed by British anthropologist Robin Dunbar in 1992 based on primate neocortex studies, it explains why human organisations above ~150 people require formal management structures, why small teams are more cohesive, and why network effects in personal relationships saturate.
An Empathy Map is a structured tool for understanding another person's or user segment's perspective across four dimensions: what they Say, Think, Do, and Feel. Developed by Dave Gray at XPLANE and widely adopted in Design Thinking, it makes user perspectives concrete, visible, and shared across a team — converting abstract knowledge about users into a tangible, actionable representation.
Game Theory is the mathematical study of strategic interaction — situations where the outcome for each participant depends on the choices of all participants. Developed by John von Neumann and Oskar Morgenstern (1944) and extended by John Nash, it provides formal frameworks for analysing negotiation, competition, cooperation, and conflict across economics, political science, biology, and business strategy.
Hanlon's Razor is the heuristic "never attribute to malice what can be adequately explained by ignorance, incompetence, or error." It is a practical application of Occam's Razor to attributions of human intent — directing us to prefer the simpler explanation (mistake) over the more loaded one (bad faith) when both are plausible. Named after Robert J. Hanlon, it counteracts the Fundamental Attribution Error in interpersonal and organisational contexts.
Incentive Theory describes how rewards, punishments, and structural conditions shape human behaviour by changing the costs and benefits of different actions. Central to economics, psychology, and organisational design, it explains why people respond to the incentives they actually face rather than those we intend, why misaligned incentives are the root cause of most persistent organisational dysfunction, and how to design systems that produce desired behaviour reliably.
The Ladder of Inference is a model developed by Chris Argyris and popularised by Peter Senge that describes the rapid, mostly unconscious process by which we move from raw observation to action through a series of inference steps. We select data, add meaning, make assumptions, draw conclusions, form beliefs, and take action — typically without awareness of the intermediate steps. The result: people in the same situation construct dramatically different realities and act on them with certainty, without realising how much interpretation shaped what they 'saw.'
Moral Hazard is the tendency for agents who are insulated from risk to behave more recklessly than they would if they bore the full consequences of their actions. A core concept in economics and insurance theory, it arises whenever there is a separation between who takes the risk and who bears its consequences — creating incentives for excessive risk-taking at the expense of others.
A Nash Equilibrium is a set of strategies in which no player can improve their outcome by unilaterally changing their own strategy, given what the others are doing. Named after mathematician John Nash, who proved that every finite game has at least one Nash Equilibrium, it is the central solution concept in game theory and explains stable outcomes in strategic interactions — not necessarily optimal, but stable because no one has individual incentive to deviate.
Nonviolent Communication is a four-component communication framework developed by Marshall Rosenberg that separates observations from evaluations, feelings from thoughts, and needs from strategies — enabling authentic expression and empathic listening that reduces conflict and increases connection. Based on the premise that all human behaviour is an attempt to meet universal needs, NVC reframes conflict as a misunderstanding about needs rather than a clash of incompatible characters.
Overton Window is a key social model describing important patterns in human interaction and social dynamics.
Pluralistic Ignorance is a key social model describing important patterns in human interaction and social dynamics.
Power Dynamics describes the patterns of relative influence, authority, and dependence between individuals and groups in social contexts. Understanding who has what leverage, how power flows, what creates and erodes it, and how it is exercised and resisted is essential for navigating organisations, negotiations, relationships, and political environments effectively.
The Principal-Agent Problem arises when one party (the agent) acts on behalf of another (the principal) but has different interests, information, and incentives. The principal can't perfectly observe the agent's actions or effort, creating opportunities for the agent to act in their own interest rather than the principal's. Central to economics, law, and management, it explains why managers may not act in shareholders' interests, why doctors may over-prescribe, and why employees may shirk.
The Prisoner's Dilemma is the foundational scenario in game theory illustrating how two rational actors can each have incentives to betray the other, even though mutual cooperation would produce better outcomes for both. Formulated by Merrill Flood and Melvin Dresher (1950) and named by Albert Tucker, it is the paradigm case for understanding why rational self-interest can produce collective irrationality, and why cooperation requires mechanisms beyond individual incentive.
Radical Candor is Kim Scott's management framework that defines the ideal combination of direct challenge and genuine personal care as the foundation of effective feedback and management. The 2×2 matrix — Care Personally vs. Challenge Directly — identifies four quadrants: Radical Candor (high care, high challenge), Ruinous Empathy (high care, low challenge), Obnoxious Aggression (low care, high challenge), and Manipulative Insincerity (low care, low challenge).
Reciprocity is the deeply embedded social norm that compels people to return favours, gifts, concessions, and other positive actions. One of Robert Cialdini's six core principles of influence, reciprocity is the basis of gift-giving rituals, the effectiveness of free samples, the social dynamics of negotiation, and the foundation of cooperative social structures. It operates across cultures, appears early in child development, and functions even when the initial gift was uninvited.
Scarcity is a psychological principle stating that individuals place a higher value on objects or opportunities that are perceived as limited in quantity, availability, or time. Formalized by Dr. Robert Cialdini in 1984 as one of the "Six Principles of Persuasion," this mental model explains the effectiveness of "Limited Time Offers," the allure of rare collectibles, and the panic of "Fear of Missing Out" (FOMO). Rooted in evolutionary biology where survival depended on securing finite resources, Scarcity triggers an urgent, emotional drive to acquire before an option is lost. Understanding Scarcity allows decision-makers to distinguish between genuine resource limitations and manufactured marketing tactics, ensuring choices are based on value rather than urgency.
Signaling Theory explains how credible communication occurs when information is asymmetric — when one party knows something the other doesn't. Because cheap talk is cheap (anyone can claim anything), credible signals must be costly to fake. College degrees signal ability partly through their cost; luxury goods signal wealth; warranties signal product quality; corporate offices signal permanence. The signal's credibility depends on its cost being higher for low-quality mimics than for high-quality genuines.
Social Capital is the value embedded in social networks — the relationships, trust, reciprocity norms, and shared expectations that enable cooperation and collective action. Robert Putnam's foundational research showed that social capital is a major predictor of economic development, health outcomes, and institutional effectiveness. Pierre Bourdieu distinguished social capital from economic and cultural capital as a separate but equally real form of wealth.
Social Proof is the psychological tendency to look to others' behaviour as evidence of the correct course of action, especially in uncertain situations. One of Robert Cialdini's six core principles of influence, it explains why testimonials, crowd behaviour, bestseller labels, star ratings, and "others are doing this" messaging reliably shift attitudes and behaviour — because humans evolved to use social information as a shortcut for uncertain decisions.
Status Games describes how much of human social behaviour is organised around the acquisition, maintenance, and display of status — relative social rank. Will Storr's framework identifies three fundamental status games — dominance, virtue, and success — which shape everything from office politics to social media behaviour to geopolitics. Understanding which game is being played reveals why people behave the way they do in groups.
Steel Manning is the intellectual practice of constructing the strongest possible version of an opposing argument — the opposite of straw-manning. Rather than attacking the weakest or most distorted version of a position, steel manning requires finding and engaging with the best version, the most sophisticated defence, and the most generous interpretation. It is both an epistemic virtue (a commitment to truth-seeking) and a practical tool for stronger thinking and more productive disagreement.
Theory of Mind is the cognitive ability to attribute mental states — beliefs, intentions, desires, emotions, knowledge — to other people, and to understand that others may hold beliefs different from your own. Essential for empathy, communication, social navigation, and collaboration, deficits in theory of mind are associated with autism spectrum conditions, certain personality disorders, and social dysfunction. It is the cognitive foundation of effective leadership, negotiation, and relationship.
The Trust Equation is David Maister, Charles Green, and Robert Galford's framework for understanding and building trust in professional relationships. Trust = (Credibility + Reliability + Intimacy) / Self-Orientation. Each variable has a specific definition and levers for improvement. Self-orientation — being focused primarily on your own interests — is the trust-destroyer; it sits in the denominator, meaning even high credibility, reliability, and intimacy are undermined by visible self-interest.
Zero-sum framing assumes one party's gain must come at another's expense — the pie is fixed. Non-zero-sum framing recognises that interactions can create value for all parties simultaneously — the pie can grow. Most real negotiations, business deals, and relationships are non-zero-sum, but people systematically default to zero-sum thinking, leaving significant value uncreated through zero-sum defensiveness in inherently cooperative situations.