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Charlie Munger spent a lifetime studying why humans make horrible decisions so you don't have to.
If you want to avoid bad decisions, here are 25 of the most powerful psychological tendencies known to man 🧵
If you want to avoid bad decisions, here are 25 of the most powerful psychological tendencies known to man 🧵
Curiosity
We like to call other species curious, but we are the most curious of all.
Without the human curiosity instinct, science and technology would not be present.
Even before there were direct incentives to innovate (capitalism), humans innovated out of curiosity.
We like to call other species curious, but we are the most curious of all.
Without the human curiosity instinct, science and technology would not be present.
Even before there were direct incentives to innovate (capitalism), humans innovated out of curiosity.
Reward and Punishment
We are driven both conciously and subconsciously by incentives and tend to drift into immoral behaviour as a result.
“Never, ever, think about something else when you should be thinking about the power of incentives.”
We are driven both conciously and subconsciously by incentives and tend to drift into immoral behaviour as a result.
“Never, ever, think about something else when you should be thinking about the power of incentives.”
Liking/Loving
We judge in favour of people and symbols we like, or ignore their faults.
When dealing with those who clearly benefit from your liking, check whether you've been influenced.
Don't distort the facts of a situation to comply with your liking.
We judge in favour of people and symbols we like, or ignore their faults.
When dealing with those who clearly benefit from your liking, check whether you've been influenced.
Don't distort the facts of a situation to comply with your liking.
Disliking/Hating
We distort facts to facilitate hatred or disdain.
Take opinions and behaviours at face value rather than in the veil of your disliking or hatred for someone or something.
Think logically about arguments, not emotionally about senders of arguments.
We distort facts to facilitate hatred or disdain.
Take opinions and behaviours at face value rather than in the veil of your disliking or hatred for someone or something.
Think logically about arguments, not emotionally about senders of arguments.
Doubt/Avoidance
The tendency to make quick, poorly thought-out decisions during stressful situations.
We feel pressure to remove doubt, and this causes ill-informed choices.
When stressed, control this by scheduling deliberate delays to strategize before reaching a decision.
The tendency to make quick, poorly thought-out decisions during stressful situations.
We feel pressure to remove doubt, and this causes ill-informed choices.
When stressed, control this by scheduling deliberate delays to strategize before reaching a decision.
Inconsistency-Avoidance
We like to be consistent in everything we do, say, and everything we are.
To save energy, we are often reluctant to change our habits, especially bad ones.
These patterns lead to cognitive errors, limiting our choice of actions in life.
We like to be consistent in everything we do, say, and everything we are.
To save energy, we are often reluctant to change our habits, especially bad ones.
These patterns lead to cognitive errors, limiting our choice of actions in life.
Kantian Fairness
We pursue and believe in perfect fairness in the world.
Stop expecting the world to be fair and adjust your behaviour accordingly.
Bad things happen to good people and good things happen to bad people: this is the way of the world.
We pursue and believe in perfect fairness in the world.
Stop expecting the world to be fair and adjust your behaviour accordingly.
Bad things happen to good people and good things happen to bad people: this is the way of the world.
Jealousy/Envy
We dislike those who make us feel our own inferiority.
Jealousy involves a triangle of relationships.
Envy involves the self and another.
“It is not greed that drives the world, but envy.” Warren Buffett
We dislike those who make us feel our own inferiority.
Jealousy involves a triangle of relationships.
Envy involves the self and another.
“It is not greed that drives the world, but envy.” Warren Buffett
Reciprocation
The tendency to reciprocate actions others have done towards us.
A culturally and societally enshrined phenomenon: "One should treat others as they would like to be treated."
Beware of ill-intentioned actions or relationships that feel transactional.
The tendency to reciprocate actions others have done towards us.
A culturally and societally enshrined phenomenon: "One should treat others as they would like to be treated."
Beware of ill-intentioned actions or relationships that feel transactional.
Influence-from-Mere-Association
We perceive people or things differently depending on who/what they are associated with, or from our past experiences with them.
Treat things on face value, not associations.
Everything has the right to an independent evaluation.
We perceive people or things differently depending on who/what they are associated with, or from our past experiences with them.
Treat things on face value, not associations.
Everything has the right to an independent evaluation.
Simple, Pain-Avoiding Psychological Denial
We distort facts for our own psychological comfort.
This psychological comfort is known as cognitive dissonance.
We should face the truth more often: It's better to deal with problems before they become bigger problems.
We distort facts for our own psychological comfort.
This psychological comfort is known as cognitive dissonance.
We should face the truth more often: It's better to deal with problems before they become bigger problems.
Excessive Self-Regard
We naturally tend to overestimate our own abilities.
A healthy amount of humility can keep you from assuming you know everything.
It helps to cultivate relationships with people who aren’t afraid to tell you when you’re wrong or need to check yourself.
We naturally tend to overestimate our own abilities.
A healthy amount of humility can keep you from assuming you know everything.
It helps to cultivate relationships with people who aren’t afraid to tell you when you’re wrong or need to check yourself.
Overoptimism
We tend to have blind faith in a good outcome or we don't pay enough attention to the potential for a bad outcome.
Optimism motivates us to pursue our goals but must be balanced with pragmatism.
Consider what could go wrong and plan accordingly.
We tend to have blind faith in a good outcome or we don't pay enough attention to the potential for a bad outcome.
Optimism motivates us to pursue our goals but must be balanced with pragmatism.
Consider what could go wrong and plan accordingly.
Deprival-Superreaction
If our freedom, status, money or anything we value is lost, we will over-react in a negative manner.
This effect is even greater when we almost have something but then lose it.
Don't let your reaction cloud your judgement of the next best steps.
If our freedom, status, money or anything we value is lost, we will over-react in a negative manner.
This effect is even greater when we almost have something but then lose it.
Don't let your reaction cloud your judgement of the next best steps.
Social-Proof
In the face of uncertainty, we look to others for answers as to how we should behave, what we should think and what we should do.
Occurs due to our natural desire to 'fit' in with the crowd.
However, we should always question whether the crowd is wrong.
In the face of uncertainty, we look to others for answers as to how we should behave, what we should think and what we should do.
Occurs due to our natural desire to 'fit' in with the crowd.
However, we should always question whether the crowd is wrong.
Contrast-Misreaction
We 'see' and 'perceive' less with simultaneous exposure to two objects of lesser or greater value in the same dimension.
Think of two product pricing options side-by-side.
Antidote: Evaluate people and objects individually and not by their contrast.
We 'see' and 'perceive' less with simultaneous exposure to two objects of lesser or greater value in the same dimension.
Think of two product pricing options side-by-side.
Antidote: Evaluate people and objects individually and not by their contrast.
Stress-Influence
Stress is good, up to a point, but will then amplify the other biases.
Light stress can slightly improve performance—say, in examinations—whereas heavy stress causes dysfunction.
Limit your major decisions while over-stressed, or de-stress first.
Stress is good, up to a point, but will then amplify the other biases.
Light stress can slightly improve performance—say, in examinations—whereas heavy stress causes dysfunction.
Limit your major decisions while over-stressed, or de-stress first.
Availability-Misweighing
We rely on information that is easy to recall or top of mind when making decisions.
When decision-making, gain different perspectives and relevant statistical information rather than relying purely on first judgments and emotive influences.
We rely on information that is easy to recall or top of mind when making decisions.
When decision-making, gain different perspectives and relevant statistical information rather than relying purely on first judgments and emotive influences.
Use-It-or-Lose-It
Our skills and knowledge decline over time if unused.
Skills and knowledge that have been mastered will depreciate more slowly than skills that haven't.
You can prevent this tendency by constantly using what you can’t afford to lose.
Our skills and knowledge decline over time if unused.
Skills and knowledge that have been mastered will depreciate more slowly than skills that haven't.
You can prevent this tendency by constantly using what you can’t afford to lose.
Drug-Misinfluence
Substance addiction—or overuse—can lead to an extremely unrealistic denial of reality.
When influenced, people tend to believe that they remain in respectable condition, with respectable prospects.
Stay away from situations or people that could lead here.
Substance addiction—or overuse—can lead to an extremely unrealistic denial of reality.
When influenced, people tend to believe that they remain in respectable condition, with respectable prospects.
Stay away from situations or people that could lead here.
Senescence-Misinfluence
As we get older, our mental abilities decline.
It’s going to happen to all of us—there's no stopping it.
However, it may be possible to slow the decline by continuing to think and learn as you age, so make a commitment to never stop learning.
As we get older, our mental abilities decline.
It’s going to happen to all of us—there's no stopping it.
However, it may be possible to slow the decline by continuing to think and learn as you age, so make a commitment to never stop learning.
Authority-Misinfluence
We trust and are influenced by leaders or authority figures too much.
Experts aren't always right.
Influencers don't always have valuable opinions.
Your boss doesn't own your thinking.
Take opinions on their logic, not their sender.
We trust and are influenced by leaders or authority figures too much.
Experts aren't always right.
Influencers don't always have valuable opinions.
Your boss doesn't own your thinking.
Take opinions on their logic, not their sender.
Twaddle
Humans waste a lot of time talking about nothing at all or by scrolling through Instagram, Facebook and Twitter, and suddenly realizing an hour has passed.
Value your time.
Create artificial barriers to time wasting if you need to get serious work done.
Humans waste a lot of time talking about nothing at all or by scrolling through Instagram, Facebook and Twitter, and suddenly realizing an hour has passed.
Value your time.
Create artificial barriers to time wasting if you need to get serious work done.
Reason-Respecting
We treasure the importance of reasons regardless of their credibility.
Providing meaningless or incorrect reasons will increase compliance with directions or requests.
When requesting something, add on "because" and watch compliance go up.
We treasure the importance of reasons regardless of their credibility.
Providing meaningless or incorrect reasons will increase compliance with directions or requests.
When requesting something, add on "because" and watch compliance go up.
Lollapalooza
Extreme consequences arising from combinations of psychological biases acting in favor of a particular outcome.
For example, auctions can generate foolish behaviour (ending in regret), because of social proof, loss aversion (FOMO), commitment, and action bias.
Extreme consequences arising from combinations of psychological biases acting in favor of a particular outcome.
For example, auctions can generate foolish behaviour (ending in regret), because of social proof, loss aversion (FOMO), commitment, and action bias.
That's a wrap!
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If you enjoyed this thread:
1. Follow me @_alexbrogan for more thought-provoking content
2. RT the tweet below to share this thread with your audience
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