Charlie Munger has spent a lifetime developing what he calls a framework for “Worldly Wisdom”. As part of this framework he penned up a 90 page opus outlining the biases and tendencies he sees as the prime motivators behind the way we think and act.
As an introduction to these heuristics I’m extracting the headlines and doing my best to paraphrase the explanations for each in a line or two. These reductions are an extreme injustice to his erudition. I’m sure I will edit the hell out of this post and will certainly revisit each one in detail later on but wanted to get them posted so here we go with Charlie’s top 25…
1) Incentive Bias
We do what works for us, we follow the rewards and avoid the punishments. This sounds simple enough but gets awfully complex. One memorable reference to this was when they first discovered the dead sea scrolls and offered a cash reward for each fragment found, upon hearing this the locals started tearing the scrolls they found into smaller pieces to maximize their reward.
2) Liking Bias
We hold their opinions too highly and listen too much to those we like or love.
3) Disliking Bias
We denigrate and don’t listen enough or at all to those we don’t like.
4) Doubt Avoidance
No one likes to be in doubt, the problem is we are in too much of a hurry to fill the doubting void with anything that comes along to fill the gap.
5) Inconsistency Avoidance
Once we have taken a position on something there is strong internal and external pressure to stick with that position even when it’s patently wrong or damaging.
6) Curiosity
It’s part of life and it’s a good thing, it’s a natural drive that can help us overcome many of the negatives associated with the other tendencies and biases on this list as well as providing lots of fun.
7) Kantian Fairness
Funny name but basically means “fair sharing” you know, lining up nicely, giving way, sharing your last bottle of water in the desert, that kind of thing. For sure people can get pretty heated when they share fairly and it’s not reciprocated. Just listen to any visitor who’s experienced queuing in China.
8) Envy and it’s friend Jealousy
Envy is wanting what they’ve got and Jealousy is all the fun you imagine they’re having. These closely related feelings are way under-rated when it comes to understanding peoples motivations both to inflict envy and to appease it.
9) Reciprocation
Another powerful and under-rated motivator. Maybe not an inbuilt tendency such as curiosity or envy but it’s taught in every human culture from our earliest moments and the ability to share and have the knowledge that somehow, someday that sharing will be returned has underpinned almost the entire growth of human development.
10) Influence from Association
It’s never good to be the one bearing bad news the mere association with that news is enough to cause problems for the one delivering it. There are good reasons why advertisers like to have smiling faces and beautiful ladies on, in or using their products. Stereotyping arises from this tendency and then becomes self reinforcing.
11) Pain Avoiding Psychological Denial
Sometimes it’s easier to just deny it than face it. This can be bizarre like the time I told my mother exactly what I was going to be doing in the evening and she point blank refused to believe it.
12) Excessive Self-Regard
Should a fresh faced blog really be making comments about this one? How often do we overestimate our own abilities, how can 90% of the population be “above average” at making love or driving cars? One interesting oddity that can result from this tendency though… “Never underestimate a man who overestimates himself”.
13) Overoptimism
I work with someone who suffers from this almost daily, but not to worry, it’s a more common ailment than one might expect.
14) Deprival Reaction
Ever tried taking a bone from a dog while he’s eating it? We value what is ours and sometimes we value what we feel is “almost” ours even more, like the guy at the end of the bar staring at the beauty he hasn’t talked to but won’t let that stand in the way of his righteous anger if someone else starts a conversation with her. The source of many a complicated negotiation.
15) Social Proof
We do as those we associate with do, when under stress we do it even more. Simple, powerful and true.
16) Contrast Misreaction
We perceive things in relative terms, we are aware of the changes in contrast not the absolute measures of those changes. Like how when we were kids running from our hot pool and then to the really, really hot pool Mum and Dad were broiling in and then back again made our pool suddenly cold. This leads me to believe that the context in which we make decisions is very important and the things we use to compare our choices with are equally important.
17) Stress Influence
We all know stress can do strange things including decrease as well as increase performance, lead to certain types of depressed states and amplify the powers of the other tendencies on this list. One that is little known and deserves more attention is it’s power to de-condition. I wish I could find more information on this aspect, if anyone cares to leave some pointers in the comments I would be appreciative.
18) Availability Bias
Amazing as our minds are they are still limited and have a tendency to mis-weigh those things that are more easily available to it or those things that are more vivid or arouse greater emotion. Consequently the parents fear of some random stranger abducting their child weighs more heavily than the neighbors swimming pool in their concerns for their welfare.
19) Use It or Lose It
We are simply better at things we do more often. If it’s rarely done then our skills in it are less than optimum and if left long enough those skills can and do disappear entirely. It would help if I had some skills in the first place.
20) Drugs
Like it or not most drugs recreational or otherwise will eventually fuck us up.
21) Senescence
Like it or not getting older will eventually do our cognitive abilities in.
22) Authority Misinfluence
Being social creatures that form hierarchal communities their is always a certain amount of tendency to listen and automatically follow those figures that are bestowed with various forms of authority without much detailed consideration. I remember following the directions of a friend at night, driving in an area where I was completely lost, he had fun at my expense when he realized I was following every direction and at his command I stopped… at a green light!
23) Twaddle Tendency
Some people are able to generate a ton of verbal crap, enough said.
24) Reason Respecting
This is a good thing, we learn well when we can see and understand the reasons behind things. We respect reason and tend to follow it. It’s not such a good thing when the reasoning is poor or misguided.
25) Lollapalooza
This is the tendency for extreme reactions and behaviors when many of the tendencies combine at the same time which is to say almost all the time as it’s hard to imagine only a single bias occurring on its own.
