Joachim Andersen

Accelerated Learning

Mental Models: Economics

Economics is the study of how individuals, businesses, and governments allocate scarce resources to satisfy unlimited wants. This section explores key economic concepts that shape our understanding of markets, decision-making, and resource allocation.


Minsky Moment

The Coase Theorem

Pareto Optimal

Minsky Moment illustrated by the contrast between financial euphoria and sudden turmoil on the stock exchange trading floor. On the right the exchange is bustling with traders who are confident and happy with their hands above their heads and numbers in the green, while on the left a chaotic scene depicts charts are in the red, almost no traders, paper notes are covering the floor and there are fires in the background.
Illustration of Coase Theorem through two individuals sitting at a table engaged in a negotiation while exchanging documents
The graph shows that there are many possible outcomes of a negotiation. Some outcomes good for the buyer, some for the seller. However only the Pareto Optimal outcomes, on the Pareto Frontier (the curve X to Y) would be good for both parties, of which e.g. A and B are Pareto Optimal allocations, while all the points e.g. C and D below the curve are sub-optimal.



Mental Models ←


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