This article is a summary of the 25 human misjudgement shared by Charlie Munger in his 1995 speech at Harvard University.
Charlie Munger noticed the extreme irrationality while attending Harvard law school. Therefore, he started recognizing and therozing the following patterns by himself based on his casual readings (especially the book “influence”) and his personal experience.
I find #24 particular common.
#1 - Reward and Punishment Superresponse Tendency
Habits is built on rewards. Incentive-caused bias can lead to rationalized immoral behavior. This means we should question more about advise when it happens to benefit the giver.
“If you would persuade, appeal to interest and not to reason” — Ben Franklin
#2 - Liking/Loving Tendency
We tend to ignore faults in people and things we like or love as well as those who like love love us.
#3 -Disliking/Hating Tendency
Other other hand, we ignore virtues in people we already have a negative judgement towards.
#4 -Doubt-Avoidance Tendency
How often do you form a judgement of something when you are never asked to do so? We love certainty, so we tend to remove doubts and stress by reaching decisions.
#5 -Inconsistency-Avoidance Tendency
It’s well explained in the book “Influence”. Once we have a small commitment, it’s hard to go against our previous conclusions, human loyalties, reputational identity, commitments, accepted role in a civilization
#6 -Curiosity Tendency
We have an innate curiosity. New things always draw our attention. While curiosity in helpful in advancing knowledge, it can also lead to lack of focus and procrastination.
#7 -Kantian Fairness Tendency
Modern man displays and expects a lot of fairness because this is necessary for an advanced civilization to work. However, the pursuit of perfect fairness which causes a lot of terrible problems.
#8 -Envy/Jealousy Tendency
Social comparison is unavoidable. When others have something that we don’t, we got a new desire.
“It is not greed that drives the world, but envy.” — Warren Buffet
#9 -Reciprocation Tendency
Another concept well explained in the book “Influence”. The automatic tendency of us to reciprocate both favors and disfavors can facilitates group cooperation, but can also be used to manipulate people.
#10 -Influence-from-Mere-Association Tendency
I’ve heard “association” was the first step in some enrollment strategy. Other examples include “high price means high quality”, “if we succeeded before, we will succeed again”, “If that influencer endorses it, it must be good.” etc.
#11 -Simple, Pain-Avoiding Psychological Denial
If the reality is too painful to face, we distort the facts until it comes bearable.
#12 -Excessive Self-Regard Tendency
We tend to overvalue ourselves and our associations. We value what we already own greater than how we would value it if we did not own it.
#13 -Overoptimism Tendency
We tend to believe the future will be better than today, and make decisions based on this. For example, when we binge watching YouTube for 6 hours straight, we image that consequence is applied to some other universe and next time we’ll do better.
#14 -Deprival-Superreaction Tendency
We tend to react with irrational intensity to a small loss of value or even the almost-possessed things.
#15 -Social-Proof Tendency
both bad and good behavior, actions and inactions, are made contagious by Social-Proof Tendency. In the presence of doubt, inaction by others becomes social proof that inaction is the right course
#16 -Contrast-Misreaction Tendency
The nervous system of man does not naturally measure in absolute scientific units, it must instead rely on something simpler. For example, business make regular price looks lower by adding higher price options.
#17 -Stress-Influence Tendency
Light stress can slightly improve performance while heavy stress causes dysfunction. An ‘acute stress disorder’ makes thinking dysfunctional by causing an extreme of pessimism, often extended in length and usually accompanied by activity-stopping fatigue.
This tendency also makes Social-Proof Tendency more powerful.
#18 -Availability-Misweighing Tendency
the brain can’t use what it can’t remember or what it is blocked from recognizing, therefore salient or fresh memory weighs more in our decisions.
#19 -Use-It-or-Lose-It Tendency
Once we stopped practicing a skill, we start losing it. I defintely find it harder to speak Mandarin after living in the US for years.
#20 -Drug-Misinfluence Tendency
No idea why this is called a tendency. Anyway, don’t use drugs.
#21 -Senescence-Misinfluence Tendency
We tend to lose cognitive ability as we age, so we have to consciously actively learn and train ourselves just as our muscles.
#22 -Authority-Misinfluence Tendency
Our society is formally organized into dominance hierarchies and we tend to follow our leaders.
#23 -Twaddle Tendency
We tend to talk just to talk because we think we know something when we actually don’t
#24 -Reason-Respecting Tendency
We tend to embrace things that have reasons and avoid things that don’t. For example, educators need to “sell” the topic before “teaching” the topic.This is so strong that even giving meaningless reasons “why” can manipulate someone into doing something they shouldn’t.
#25 -Lollapalooza Tendency
When tendencies combine, they are even more powerful, and more likely to lead to bad decision-making.
