The Fools Theory

I am a collector of mental models and frameworks. I learned a new one recently from Ukrainian investment banker friend. It’s the “Fools Theory.” In this framework, it posits that the world is split between 4 types of people. Wise Guys/Gals, Simpletons/ Martyrs, Bandits and Fools.

The Wise Guys/Gals: make decisions based on what is good for themselves and other parties. 

Self explanatory but these are the Win-Win folks straight from Steven Covey. Long term thinkers and this path tends to be more sustainable. 

The Simpletons/ Martyrs: make decisions that are good for others but not themselves. 

These are amazing human beings who end up being burned out or resentful because they end up giving so much of themselves and are taken advantage of by others (sadly). 

The Bandits: make decisions that are only good for themselves, but not for others.

We all know people like this. Not necessarily bad either as you know they are out for themselves. So they are pretty predictable and you know what to expect from them. 

The Fools: make decisions that are bad for themselves and for others. 

Basically these folks have no clue what they are doing. Also arguably the most dangerous people among us as they end up hurting everyone around them. 

I found this to be a super helpful framework as I get to know people. Once you see this, you literally cannot unsee it around us. Understanding what drives people is critical. 

Using this framework & seeing where people fit, you get a better sense of whether you want to do business or hang out with them. And assuming you have no choice in spending time with them, it’s a guideline on how you handle them. We’re all in the people business at the end of day.   

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