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3 (Most Important) Fallacies to Avoid

3 (Most Important) Fallacies to Avoid

Don't fall for these | Wisdom Letter #291

Ayush Chaturvedi
April 06, 2025

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Personal development and self help, productivity tips, mental models and cognitive biases

Now, onto the 3 fallacies to avoid -

Smart people focus more on avoiding mistakes than trying to doing extra ordinary things.

As Charlie Munger said - Invert, always invert.

I wanted to highlight 3 fallacies you should never fall for in life, probably the most painful cognitive mistakes you can make.

Sunk Costs Fallacy

Its our tendency to stick with poor past decisions because we are too deeply invested in them.

We think of those past costs as investments.

And we don’t want to back away from those investments right before they start paying dividends.

Without realizing that those supposed “investments” are actually “costs” that are dragging back our ability to make sound future investments.

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Narrative Fallacy

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“We seek explanations even to the point that we will manufacture them”

- Nassim Nicholas Taleb

The Narrative Fallacy is the concept that our brain tends to fall for well crafted narratives, even when they are far from the truth.

It was coined and further explained by Taleb in his seminal books : Fooled by Randomness & The Black Swan.

We have this tremendous urge to make sense of everything. To rationalize everything. To fit every event in a neat pattern or a smart story that explains everything.

The narrative fallacy works against us when its used to influence our behavior. And it works for us when we can use it intelligently to our advantage.

Correlation Causation Fallacy

This mental model derived from statistics is perhaps the most important tool we need to make sense of all the information thrown at us every minute of every day these days.

Just because two events are correlated does not imply that one causes the other.

Causation may or may not exist.

Their correlation may be explained by a third external factor that caused both of them.