Charlie Munger: 24 (22) causes of human misjudgment

List of key bias per Munger:
Where a “cognitive bias is a systematic pattern of deviation from norm or rationality in judgment. Individuals create their own “subjective reality” from their perception of the input”

Video of full speech: 1hr16m (Youtube)

Transcript (www.fs.blog)

  1. Under recognition of incentives (reinforcement)
  2. Psychological denial
  3. Incentive-cause bias, “agency costs
  4. Bias from consistency and commitment tendency
  5. Bias from Pavlovian association
  6. Bias from reciprocation tendency
    • “What you do will change what you think”
  7. Bias from over influence of social proof
  8. Elegant math
    • ”Better to be roughly right than precisely wrong” – John Maynard Keynes
  9. Bias from contrast caused distortions of sensation, perception and cognition
    • ”Cognition mimics sensation”
  10. Bias from over-influence by authority
  11. Bias from deprival, super-reaction syndrome – including threatened removal of something almost possessed
  12. Bias from envy/jealousy
    • “It’s not greed that drives the world but envy” – Warren Buffet
  13. Bias from chemical dependency
    • “The tendency to distort reality so that it’s endurable”
  14. Bias from mis-gambling compulsion
  15. Bias from liking distortion (reciprocal: disliking distortion)
  16. Bias from non-mathematical nature of the human brain… tendency to overweigh conveniently available information
    • ”All the things on this list distort judgement”
  17. Bias from over-influence by vivid evidence
  18. Mental confusion caused by information not arrayed in the mind and theory structures, creating sound generalizations developed in response to the question “Why
    • “If you want to persuade someone tell them the “Why”
  19. Normal limitations of sensation, memory, cognition and knowledge
  20. Stress-induced mental changes
  21. Mental illness and decline
  22. Organizational confusion from say-something syndrome
    • “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.” Blaise Pascal

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