psychology of human misjudgement

Psychology of Human Misjudgement

Self-Check List

What is this?

• Before making an important decision go over this list to see if you are falling as a victim to any of the fallacies of human misjudgement

• This collection is based on Charles T. Munger’s Psychology of Human Misjudgment essay

• Check out the book: Poor Charlie’s Almanach!

Reward and Punishment

• Who has what incentives?

• Are they aligned?

• What are the positive and negative incentives that are shaping this situation for any of the parties involved?

Liking Loving

• Is there any liking or loving and association that can skew decision making?

• Anything from the past / or association that makes you like an outcome more than an other?

Disliking / Hating

• Is there any disliking or hating and association that can skew decision making?

• Anything from the past / or association that makes you dislike something about an outcome?

Doubt Avoidance

• Do you just quickly want to jump to a conclusion to ease the decision making, save energy and time?

Inconsistency - Avoidance• Do you act in a specific way because you don’t

want to break the image what you have built?

• Are there any actions in your past that solidified your image in front of others that you try to live up to?

• Any past decisions that pointed one way?

• Be brave to change your mind, if new information came along.

Curiosity

• Curiosity increases productivity by bringing extra motivation!

• Are there anything like that on any sides?

• Can you utilize curiosity to make the decision making more effective?

Kantian Fairness

• People should deal with others as they expect others to treat them.

• Are you dealing this way?

Envy Jealousy

• Is there any jealousy in the situation?

Reciprocity

• Is there any pressure to reciprocate what you were given?

Influence from Association

• Are you associating the thing with something that makes you believe something? (eg. high price = high quality; past success = current situation)

• Liking / disliking

• Stereotypes

Pain Avoidance

• Are you closing your eyes to avoid pain?

Excessive Self Regard

• Do you have a too strong liking towards your own product, person, or idea that skews decision making?

• Hiring decisions, ideas

• Are you thinking objectively about yourself and about your possessions?

Overoptimism

• Are you using probability theory to assess the real chances?

• Or you are overoptimistic? or over pessimistic?

Deprival Super Reaction• The loss of the same amount gives more pain,

than the gain of the same amount

• Prospect Theory

• Overreacting to possible losses

• Not acting to prevent losses?

• Not using your energy to gain the same amount?

Social Proof• Doing something because others do it?

• Because other’s approve it?

• Other’s don’t show concern?

• Don’t do something because others don’t do it?

• Recognize and ignore these pressures.

• Hang out with people who give you the values you need.

Comparison Contrast• Anchoring.

• Are you looking at the thing with fresh eyes or are you skewed by a recent thing you can compare to?

• this is not that bad, compared to the previous one. but is it the right ONE?

• It’s not that expensive compared to the previous one or other thing.

Availability - Misweighting

• Are you thinking that something that is easily available to the mind is more important than something that is not?

• Fears, and extremes are very deeply memorized. (media pushes stuff in you)

• Is it actually real? or

Use it or lose it

• Man with a hammer tendency? People tend to see things through their own filters, and solve problems based on what skills they have.

• Using the skills that are important? or losing them

• Use checklists to asses things and don’t forget mental tools.

Drug Misfluence

• Under the effect of drugs?

Senescence

• Old people mentally decay…

• Effect of this on outcome?

Authority

• People who seem authorities shape decisions?

• Listening to them only because they are pro?

• or logical reasons

Twaddle

• People who have no idea say things that can interfere with other people who matter.

• Are you listening to people who matter?

• Are you filtering our opinions successfully that don’t matter?

Reason Respecting

• Tell people who does what where and WHY

• WHY is really important.

• “Please let me in the line, because I have to use the copier!”

• Giving non-sense reason, it still works.

Loollapalooza

• Multiple tendencies point the same way:

• Creates a super powerful push and motivation!