What Charlie Munger thinks about behavioural science
Warren Buffett's business partner and vice chairman of Berkshire Hathaway; also chaired Wesco Financial Corporation from 1984 to 2011, where he wrote its annual letters himself.
Everything they publish, on ppll ↗
Charlie Munger did not write this page.
We collected these quotes from things they published elsewhere, and every quote links to where it was said. They have no account here and have not endorsed this site. Quotes are word for word; the short line under each one is our own restatement, not their wording. Their own site. Is this you? Claim it or ask us to remove it. Or tell us what is wrong here.
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Only Charlie Munger on behavioural science. See everyone on behavioural science
11 dated positions, 1986 to 2007, in their own words. Our reading of what Charlie Munger has said — not written or endorsed by them.
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Our readingOne has to allow for the self-serving bias of everybody else, and failing to do so is foolish
Their wordsYou also have to allow for the self-serving bias of everybody else, because most people are not gonna remove it all that successfully, the only condition being what it is. If you don’t allow for self-serving bias in your conduct, again, you’re a fool.
↗2007 USC Law School Commencement Addressjamesclear.com 10th of 14 in this piece
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Their wordsA man has an acculturated nature making him a pretty decent fellow, and yet, driven both consciously and subconsciously by incentives, he drifts into immoral behavior in order to get what he wants, a result he facilitates by rationalizing his bad behavior, like the salesmen at Xerox who harmed customers in order to maximize their sales commissions.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 4th of 17 in this piece
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Their wordsWidespread incentive-caused bias requires that one should often distrust, or take with a grain of salt, the advice of one’s professional advisor, even if he is an engineer. The general antidotes here are: (1) especially fear professional advice when it is especially good for the advisor; (2) learn and use the basic elements of your advisor’s trade as you deal with your advisor; and (3) double check, disbelieve, or replace much of what you’re told, to the degree that seems appropriate after objective thought.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 5th of 17 in this piece
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Their wordsOne very practical consequence of Liking/ Loving Tendency is that it acts as a conditioning device that makes the liker or lover tend (1) to ignore faults of, and comply with wishes of, the object of his affection, (2) to favor people, products, and actions merely associated with the object of his affection (as we shall see when we get to “Influence-from-Mere-Association Tendency,” and (3) to distort other facts to facilitate love.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 6th of 17 in this piece
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Their wordsIt is easy to see that a quickly reached conclusion, triggered by Doubt-Avoidance Tendency, when combined with a tendency to resist any change in that conclusion, will naturally cause a lot of errors in cognition for modern man.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 7th of 17 in this piece
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Their wordsThe quantity of man’s pleasure from a ten- dollar gain does not exactly match the quantity of his displeasure from a ten-dollar loss. That is, the loss seems to hurt much more than the gain seems to help.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 10th of 17 in this piece
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Their wordsFor some such reason, man’s evolution left him with Social-Proof Tendency, an automatic tendency to think and act as he sees others around him thinking and acting.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 11th of 17 in this piece
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Their wordsWhen a man’s steps are consecutively taken toward disaster, with each step being very small, the brain’s Contrast-Misreaction Tendency will often let the man go too far toward disaster to be able to avoid it. This happens because each step presents so small a contrast from his present position.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 13th of 17 in this piece
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Their wordsThis tendency was not in any of the psychology texts I once examined, at least in any coherent fashion, yet it dominates life. It accounts for the extreme result in the Milgram experiment and the extreme success of some cults that have stumbled through practice evolution into bringing pressure from many psychological tendencies to bear at the same time on conversion targets.
↗The Psychology of Human Misjudgment (revised text, 2005)fs.blog 17th of 17 in this piece
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Their wordsThe elementary part of psychology—the psychology of misjudgment, as I call it—is a terribly important thing to learn. There are about 20 little principles. And they interact, so it gets slightly complicated. But the guts of it is unbelievably important. Terribly smart people make totally bonkers mistakes by failing to pay heed to it.
↗A Lesson on Elementary Worldly Wisdom As It Relates To Investment Management & Business (USC Business School, 1994)fs.blog 6th of 13 in this piece
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Their wordsDarwin’s result was due in large measure to his working method, which violated all my rules for misery and particularly emphasized a backward twist in that he always gave priority attention to evidence tending to disconfirm whatever cherished and hard-won theory he already had. In contrast, most people early achieve and later intensify a tendency to process new and disconfirming information so that any original conclusion remains intact.
↗How to Guarantee a Life of Misery (Harvard School commencement address, 1986)jamesclear.com 5th of 5 in this piece