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I often find that my understanding of the world is strongly informed by a few key concepts. For example, I've repeatedly found the concept of opportunity cost to be a useful frame. My previous post on privileging the question is in some sense about the opportunity cost of paying attention to certain kinds of questions (namely that you don't get to use that attention on other kinds of questions). Efficient charity can also be thought of in terms of the opportunity cost of donating inefficiently to charity. I've also found the concept of incentive structure very useful for thinking about the behavior of groups of people in aggregate (see perverse incentive).
I'd like people to use this thread to post examples of concepts they've found particularly useful for understanding the world. I'm personally more interested in concepts that don't come from the Sequences, but comments describing a concept from the Sequences and explaining why you've found it useful may help people new to the Sequences. ("Useful" should be interpreted broadly: a concept specific to a particular field might be useful more generally as a metaphor.)
Can you expand on this? How has this concept helped you understand things?
It's not so much a way to understand the world as it is a deep engineering principle. You want to design systems in such a way that if there is a problem, the system fails sooner rather than later. One very counter-intuitive technique used in software engineering is the assertion, which has no effect other than to shut the system down if a certain expression evaluates to false. Naively, it seems crazy that we would ever want to add to the set of conditions that will cause a crash - but that is exactly the point.
Failfast is part of the more general strategy expressed by the slogan tighten your feedback loops. If you are doing something stupid, you want to know as soon as possible. This is hard for humans to do, since we have a natural aversion to bad news and discipline.