Listened to the full speech by Charlie
Munger (text).
I think there are cheat sheets of cognitive biases that I need to add into my
mental model and thinking system. Munger talks about psychological biases which
we need to be aware of in our own behavior and also would be good to know in
dealing with others – if we use these to engineer common good (not to
manipulate for evil purposes).
- Power
of incentives – using incentives to drive behavior. But I guess carrot
/ stick might work only to certain extent (learning from “Drive”).
Examples - FedEx starting night shift allowance which allowed them to get people for night shifts. Reinforcement.
- Simple
psychological denial - "The reality is too painful to bear, so
you just distort it until it's bearable." A mom refusing to believe
her son is dead.
- “Bias
from consistency and commitment tendency, including the tendency to
avoid or promptly resolve cognitive dissonance. Includes the
self-confirmation tendency of all conclusions, particularly expressed
conclusions, and with a special persistence for conclusions that are
hard-won.”
“Human mind is a lot like the
human egg, and the human egg has a shut-off device. When one sperm gets in, it
shuts down so the next one can't get in. The human mind has a big tendency of
the same sort.
if you make a public disclosure of your conclusion, you're pounding it into your own head.”
if you make a public disclosure of your conclusion, you're pounding it into your own head.”
“The Chinese brainwashing system,
which was for war prisoners, was way better than anybody else's. They
maneuvered people into making tiny little commitments and declarations, and
then they'd slowly build.”
- “Bias
from Pavlovian association, misconstruing past correlation as a
reliable basis for decision-making.” Dog salivates when bell rings.
Operant conditioning.
- Bias
from reciprocation tendency – do a small favor first and ask
for return, increases chance of others reciprocating.
- Bias
from over-influence by social proof, that is, the conclusions of
others, particularly under conditions of natural uncertainty and
stress. Following what the community / group does or does not do.
- Bias
from contrast caused distortions of sensation, perception, and cognition. Frog
dying in water that is slowly getting heated. People dipping their hand in
room temperature water after dipping first in hot or cold feels room
temperature water is vice versa. Contrast. Overprice first, then show medium
price and people accept.
- Bias
from over-influence by authority. Milgram prisoner torture
experiment. Co-pilot doesn't call out pilot's obvious faults in 25% cases.
- Bias
from Deprival Super Reaction Syndrome, including bias caused by
present or threatened scarcity, including threatened removal of something
almost possessed but never possessed. Scarcity bias. People do not
react symmetrically to loss and gain.
- Bias
from envy/jealousy
- Bias
from gambling compulsion
- Bias
from liking distortion, including the tendency to especially like
oneself, one's own kind, and one's own idea structures, and the tendency
to be especially susceptible to being mislead by someone liked.
- Bias
from disliking distortion. The reciprocal of liking distortion and the
tendency not to learn appropriately from someone disliked.
- “Bias
from the non-mathematical nature of the human brain in its natural
state as it deals with probabilities employing crude heuristics and is
often mislead by mere contrast. The tendency to overweigh conveniently
available information and other psychological rooted mis-thinking
tendencies on this list when the brain should be using the simple
probability mathematics of Fermat and Pascal, applied to all reasonably
attainable and correctly weighted items of information that are of value
in predicting outcomes.
- Bias
from over-influence by extra vivid evidence.
- “Mental
confusion caused by information not arrayed in the mind and theory
structures creating sound generalizations, developed in response to the
question why. Also mis-influence from information that apparently but not
really answers the question why. Also failure to obtain deserved influence
caused by not properly explaining why.
You've got to array facts on theory structures answering the question why. If you don't do that, you cannot handle the world.
You want to persuade somebody, you really tell them why. And what did we learn in lesson one? Incentives really matter. Vivid evidence really works.”
“The clear answer is the combination greatly increases power to change
behavior, compared to the power of merely one tendency acting alone.“ Multiple
factors from above can combine in a transaction.
