Wednesday, October 03, 2007

Success Secrets: Munger's "Misjudgment" Part 2

Charlie Munger’s work brings to light many of the mind’s “tendency to use oversimplified algorithms” (Munger's words) in decision-making. This series examines Munger’s “Psychology of Human Misjudgment".

4. Munger‘s Descriptor: Doubt-Avoidance Tendency
Alternate Descriptor: Humans often make decisions too quickly for emotional, rather than rational, reasons.

Expect people to make hurried, possibly bad, decisions under stress. Attempt to avoid this tendency when making your own decisions.

5. Munger’s Descriptor: Inconsistency-Avoidance Tendency
Alternate Descriptor: We are habit-driven. We behave in a manner we deem consistent with our identity.

Expect people to be trapped in habits of thought for their lifetime. Expect people to ignore evidence when it is counter to their identity.

To adopt a new (good) habit, use the concept of consistency with the new identity to reinforce the habit. “Fake it until you make it”.

To avoid self-consistency bias, look for disconfirming evidence.

6. Munger’s Descriptor: Curiosity Tendency
Alternate Descriptor: Curiosity Tendency

Curiosity can aid the quest to reduce the other ‘human misjudgments”. Munger’s mention of the less-curious Romans (as opposed to the Greeks) is a reminder that we can gain much practical use from the curiosity of others that have gone before us.


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