Charlie Munger: 24 Standard Causes of Human Misjudgment

2m read

·Nov 7, 2024

Well, I am very interested in the subject of human misjudgment, and Lord knows I've created my well, a good bit of it. I don't think I've created my full statistical share, and I think that one of the reasons was that I tried to do something about this terrible ignorance I left the Harvard Law School with. When I saw this patterned irrationality, which was so extreme, I had no theory or anything to deal with it, but I could see that it was extreme and I could see that it was patterned. I just started to create my own system of psychology, partly by casual reading, but largely from personal experience.

I used that pattern to help me get through life. Fairly late in life, I stumbled into this book influenced by a psychologist named Bob Cialdini, who became a super tenured hotshot on a two-thousand-person faculty at a very young age. He wrote this book which has now sold 300,000 copies, which is remarkable for, semi, well, it's an academic book aimed at a popular audience. That filled in a lot of holes in my crude system, and when those holes had filled in, I thought I had a system that was a good working tool, and I'd like to share that one with you.

I came here because behavioral economics—how could economics not be behavioral? If it isn't behavioral, what the hell is it? I think it's fairly clear that all reality has to respect all other reality. If you come to inconsistencies, they have to be resolved. So the idea of, if there's anything valid in psychology, economics has to recognize it, and vice versa. I think the people that are working on this fringe between economics and psychology are absolutely right to be there, and I think there's been plenty wrong over the years.

Well, let me romp through as much of this list as I have time to get through: 24 standard causes of human misjudgment. First: under-recognition of the power of what psychologists call reinforcement and economists call incentives. Well, you say everybody knows that. Well, I think I've been in the top five

The Slight Edge by Jeff Olson: Summary

Dividing whole numbers by 10 | Math | 4th grade | Khan Academy

View All

Ideology and social policy | US government and civics | Khan Academy

In this off-white color, I have a handful of statements that you might hear folks say, especially in the United States. What we’re going to think about is, are these statements that you would typically hear from a liberal? I’m gonna make a little key here…

DNA Testing and Privacy (Behind the scenes at the 23andMe Lab) - Smarter Every Day 176

What’s up, I’m Destin, this is Smarter Every Day. You’ve probably heard of 23andMe. It’s one of these companies where you spit in the tube and you mail it off, and they do DNA testing and give you ancestry and health data. Well, here’s the deal. They appr…

Price discrimination for a monopoly | Microeconomics | Khan Academy

Let’s say that you own the only hotel that is in a city. For a wide variety of reasons, maybe all of the city council members are your friends or whatever else, no one else can build a hotel in the city. So there are insurmountable barriers to entry. In t…

The Bull Market Of 2020 | Did We Miss The Stock Market Bottom?

What’s up guys, it’s Graham here. So, the other morning it was really like any other. I woke up around 6 a.m., I went to the kitchen, I got myself some coffee, I sat down in front of my computer, I took a sip of said coffee, and then I literally spit it b…

Effective | Vocabulary | Khan Academy

This one’s going to work like a charm, wordsmiths, because the word we’re featuring in this video is effective. Effective, it’s an adjective meaning successful, good at something. The etymology, the derivation of this word helps explain it, I think. Thre…

Car payment calculation | | Car buying | Financial Literacy | Khan Academy

So let’s think a little bit about how you might likely pay for a car. Now, there’s really three ways to pay for a car. One, you might just have enough cash in your bank account and you could pay for it outright. Another model is that you could rent the ca…

Charlie Munger: 24 Standard Causes of Human Misjudgment

More Articles