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cHARLIE mUNGER

Published on Nov 20, 2015

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MORE DECKS TO EXPLORE

PRESENTATION OUTLINE

1.

cHARLIE mUNGER

ON POOR HUMAN JUDGEMENT
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2.

june 1995

 harvard university
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3.

SYNOPSIS

24 STANDARD CAUSES OF MISJUDGEMENT
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4.

UNDER ESTIMATION OF THE POWER OF INCENTIVES

1/24
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5.

DENIAL

2/24
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6.

INCENTIVE-CAUSE BIAS

believing in what made past profit no matter the evidence 3/24
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7.

CONSISTENCY BIAS

believeing in what has worked in the past 4/24
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8.

Pavlovian bias

5/24 doing things over and over assuming that the risk is less and less
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9.

reciprocation

6/24 actions influence thoughts, thoughts influence actions
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10.

over influence of social proof

7/24 monkey see, monkey do
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11.

elegant math

8/24 no matter how cool it is the fanciest hammer can't tighten a bolt 
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12.

contrast distortions

if the contrast is small enough it's hard to notice before it's too late
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13.

over-influence by authority

10/24 the boss is doing it so it must be a good idea
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14.

deprival super reaction

take something away we see as being ours and we often over react 11/24
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15.

envy

“It’s not greed that drives the world, but envy.” WB
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16.

chemical dependenCY

DISTORTING REALITY TO MAKE IT ENDRUABLE 
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17.

UINTENDED GAMBLING

OBSCURING RISK BY OFFERING CHOICE AND SMALL COMMITMENTS
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18.

DISTORTION BY "LIKE"

I LIKE IT BECAUSE IT AGREES WITH SOMETHING I LIKE
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19.

human attraction to crude heuristics

do the math, simple probabilities are powerful tools for good decisions
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20.

super vivid events

shocking or unexpected events can easily overwhelm and distract
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21.

poor understanding of "why"

disordered thinking leads to confusion of facts and misunderstanding "why"
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22.

normal limits

of sensory systems: memory, cognition, knowlege
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23.

stress/crisis induced mental change

temporary or permanent, small or large 
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24.

mental disorders/illness

temporary or permanent including loss from disuse and decline
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25.

INCOHERENCE

important information is lost in failed attempts at communication
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26.

notes from the q&a

  • When these combine it creates a powerful set of behaviors 
  • Watch out for these combinations they are most dangerous
  • Some of the items are overlaps and permutations of others
  • That is okay because they present a great deal of benefit
  • The ordered rational thinking suggested here is a powerful tool 
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27.

more notes

  • organize your day to do unpleasant things first
  • reward yourself with things you like doing after
  • keep good records, analyize the thinking that lead to failures
  • build careful habits that serve you
  • don't go to open auctions, skip all auctions
28.

be wary of over specialization

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29.

Charles munger

with warren buffet are among the most successful investors ever
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30.

Untitled Slide

Tony Wood

https://www.facebook.com/tonywoodit