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Charlie Munger – 24 Standard Causes of Human Misjudgment in 15 minutes


24 Standard Causes of Human Misjudgment according to Charlie Munger:

0:04 1. Under-recognition of the power of incentives

0:34 2. Simple psychological denial

1:05 3. Incentive-caused bias

1:48 4. & 5. Bias from consistency and commitment tendency

2:53 6. Bias from Pavlovian association (misconstruing past correlation as a reliable basis for decision making)

4:33 7. Bias from reciprocation tendency, including the tendency of one on a roll to act as other persons expect

5:52 8. Bias from over-influence by social proof (the conclusions of others)

6:45 9. Bias from contrast caused distortions of sensation, perception and cognition

7:59 10. Bias from over-influence by authority

8:26 11. Bias from deprival super reaction syndrome, including bias caused by present or threatened scarcity, including threatened removal of something almost possessed but never possessed

8:52 12. Bias from envy/jealousy

9:24 13. Bias from chemical dependency

9:40 14. Bias from mis-gambling compulsion

10:17 15. Bias from liking distortion

10:30 16. Bias from disliking distortion

10:40 17. Man with a hammer syndrome

12:04 18. Bias from the non-mathematical nature of the human brain in its natural state as it deals with probabilities employing crude heuristics

13:51 19. Bias from over-influence by extra vivid evidence

14:30 20. Mental confusion caused by information not arrayed in the mind and theory structures creating sound generalizations, developed in response to the question why

14:56 21. Other normal limitations of sensation, memory, cognition and knowledge

15:01 22. Stress-induced mental changes

15:32 23. Other common mental illnesses and declines, temporary and permanent

15:36 24. Say-something syndrome

Charlie Munger shared this list with us in his speech on the Psychology of Human Misjudgment, given at Harvard University in 1995.This audio clip was taken and edited from the following video:

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Charlie Munger
Charles Thomas Munger (born January 1, 1924) is an American investor, businessman, former real estate attorney, architectural designer, and philanthropist. He is vice chairman of Berkshire Hathaway, the conglomerate controlled by Warren Buffett; Buffett has described Munger as his partner. Munger served as chairman of Wesco Financial Corporation from 1984 through 2011. He is also chairman of the Daily Journal Corporation, based in Los Angeles, California, and a director of Costco Wholesale Corporation.
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