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Charlie Munger On Misjudgment – Day 16 0 comments

The following is a daily publication by section of a Munger

at Harvard in which he explained patterned irrationality, much of which he learned from Robert Cialdini's Influence.

I hope readers will contribute examples and opportunities in the comment section.

16. Bias from the non-mathematical nature of the human brain in its natural state as it deal with probabilities employing crude heuristics, and is often misled by mere contrast, a tendency to overweigh conveniently available information and other psychologically misrouted thinking tendencies on this list.

When the brain should be using the simple probability mathematics of Fermat and Pascal applied to all reasonably obtainable and correctly weighted items of information that are of value in predicting outcomes, the right way to think is the way Zeckhauser plays bridge. It's just that simple. And your brain doesn't naturally know how to think the way Zeckhauser knows how to play bridge. Now, you notice I put in that availability thing, and there I'm mimicking the very eminent psychologists Daniel Kahneman and Amos Tversky, who raised the idea of availability to a whole heuristic of misjudgment. And they are very substantially right.

I mean ask the Coca-Cola Company (NYSE:KO), which has raised availability to a secular religion. If availability changes behavior, you will drink a helluva lot more Coke if it's always available. I mean availability does change behavior and cognition. Nonetheless, even though I recognize that and applaud Tversky and Kahneman, I don't like it for my personal system except as part of a greater sub-system, which is you've got to think the way Zeckhauser plays bridge. And it isn't just the lack of availability that distorts your judgment. All the things on this list distort judgment. And I want to train myself to kind of mentally run down the list instead of just jumping on...


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