25 Cognitive Biases - Bias 1 Reward-Punishment Super-Response Tendency

Bias 1 – Reward and Punishment Super-Response Tendency

The power that incentives and disincentives have on the actions of others cannot be overstated. Munger says this should be obvious but so many people don’t understand the how important incentives are for shaping people’s motivation to complete a task. Incentives and disincentives are extremely important in changing behavior. Just follow Benjamin Franklin’s Maxim: “If you would persuade, appeal to…

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25 Cognitive Biases - Bias 2 Liking-Loving Tendency

Bias 2 – Liking/Loving Tendency

We ignore the faults of other people, products or companies that we admire. According to Charlie Munger, a newly arrived human is born to like and love, and the strongest inborn tendency to love is that of a mother for its child. Liking/Loving tendency makes the liker or lover tend to: To ignore the faults of, and comply with wishes…

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25 Cognitive Biases - Bias 3 Disliking-Hating Tendency

Bias 3 – Disliking/Hating Tendency

We also ignore the virtues of those things we dislike and distort the facts to facilitate that hatred while putting on blinders to other options and opinions. Disliking/Hating Tendency happens from the time the newly arrived human is also born to “dislike and hate” 1) Ignore the virtues in the object of dislike. 2) Dislike people products and actions merely…

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25 Cognitive Biases - Bias 4 Doubt-Avoidance Tendency

Bias 4 – Doubt-Avoidance Tendency

If we are unsure about a decision we try to quickly remove any doubt by making an ill-informed, quick decision, this is doubt-avoidance tendency Doubt-avoidance tendenty is triggered by some combination of puzzlement and stress.

25 Cognitive Biases - Bias 5 Inconsistency-Avoidance Tendency

Bias 5 – Inconsistency-Avoidance Tendency

We have a reluctance to change. Eliminating bad habits is a rare trait. The brain of man conserves programming space by being reluctant to change, which is a form of inconsistency avoidance. Factors that create an anti-change and Inconsistency Avoidance Tendency mode in humans: It facilitated faster decisions when speed of decision was an important contribution to the survival on…

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25 Cognitive Biases - Bias 6 Curiosity Tendency

Bias 6 – Curiosity Tendency

There is not enough curiosity to learn, even though you receive so many benefits from a continuous learning process. Munger says, “the curious are also provided with much fun and wisdom once formal education has ended.” Curiosity tendency has been one of the main drivers in human progress throughout history, the amount of curiosity in the human species is much…

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25 Cognitive Biases - Bias 7 Kantian Fairness Tendency

Bias 7 – Kantian Fairness Tendency

Life isn’t fair, but many can’t accept this. Tolerating a little unfairness should be okay if it means a greater fairness for all. The example Munger uses is letting in other drivers on the freeway knowing they will reciprocate in the future. Kantian Fairness Tendency Kant’s “Categorical imperative” or golden rules consists of humans require to follow those behavior patterns…

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25 Cognitive Biases - Bias 8 Envy-Jealousy Tendency

Bias 8 – Envy/Jealousy Tendency

Self-explanatory, but Munger makes an interesting point that envy/jealously tendency is surprisingly absent from most Psychology textbooks. Envy/jealously tendency comes from the need to get often-scarce food, this occurs often when the food is seen in possesion of another member of the same species “it is not greed that drives the world, but envy” – Warren Buffet

25 Cognitive Biases - Bias 9 Reciprocation Tendency

Bias 9 – Reciprocation Tendency

In reciprocation tendency, we tend to want to return the favor when someone helps us, which can be a good thing at times, but it can also lead to poor decisions if you reciprocate business deals based on these minor favors.

25 Cognitive Biases - Bias10 Influence-From-Mere-Association Tendency

Bias 10 – Influence-From-Mere-Association Tendency

We can be easily manipulated by mere association. It can be a group of people, the quality of a product, advertising, etc.

25 Cognitive Biases - Bias11 Simple Pain-Avoiding Psychological Denial

Bias 11 – Simple, Pain-Avoiding Psychological Denial

We have a habit of distorting the facts until they become bearable for our own views.

25 Cognitive Biases - Bias 12 Excesive Self-Regard Tendency

Bias 12 – Excessive Self-Regard Tendency

We all think we’re above average. This is where overconfidence comes from. Munger says the greatest type of pride should be taking pride in being trustworthy to avoid developing an ego. This is the sickness of dictators…

25 Cognitive Biases - Bias13 Over-Optimism Tendency

Bias 13 – Over-Optimism Tendency

Over-optimism bias usually shows that excess of optimism is the normal human condition

25 Cognitive Biases - Bias 14 Deprival Super-Reaction Tendency

Bias 14 – Deprival-Superreaction Tendency

Deprival-Superreaction in a way is loss aversion. Loss aversion refers to people’s tendency to strongly prefer avoiding losses to acquiring gains. Most studies suggest that losses are twice as powerful, psychologically, as gains. A man ordinarily reacts with irrational intensity to even a small loss, or threatened loss, of property, love, friendship, dominated territory, opportunity, status or any other valued…

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25 Cognitive Biases - Bias 15 Social-Proof Tendency

Bias 15 – Social-Proof Tendency

Social-Proof Tendency is an automatic tendency to think and act as others around think and act

25 Cognitive Biases - Bias 16 Contrast-Misreaction Tendency

Bias 16 – Contrast-Misreaction Tendency

25 Cognitive Biases – Bias 16 Contrast-Misreaction Tendency Our problem here is a misunderstanding of comparisons and missing out on the magnitude of decisions, it is better to evaluate people and objects by themselves and not by their contrast. An example of Contrast Misreaction Tendency Contrast Misreaction Tendency is routinely used to cause disadvantge for a customer, making an ordinary…

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25 Cognitive Biases - Bias 17 Stress-Influence Tendency

Bias 17 – Stress-Influence Tendency

Adrenaline tends to produce faster and more extreme reactions. Some stress can improve performance but heavy stress often leads to dysfunction.

25 Cognitive Biases - Bias 18 Availability-Misweighting Tendency

Bias 18 – Availability-Misweighing Tendency

We overweight what’s easily available. A checklist or set of rules can help with this tendency. Man’s imperfect, limited-capacity brain easily drifts into working with what’s easily available to it. And the brain can’t use what it can’t remember or what it is blocked from recognizing because it is heavily influenced by one or more psychological tendencies bearing strongly on…

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25 Cognitive Biases - Bias 19 Use-it-or-Lose-it Tendency

Bias 19 – Use-it-or-Lose-It Tendency

Too many learn a skill to simply cram for a test or presentation instead of trying to actually understand it fluently Skills attenuate with disuse. Throughout his life, a wise man engages in practice for all his useful, rarely used skills, may of them outside his discipline, as a sort of duty to his better self. Skills of a very…

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25 Cognitive Biases - Bias 20 Drug-Misinfluence Tendency

Bias 20 – Drug-Misinfluence Tendency

This is a very strong tendency that costs lives. It can only be supplemented by Simple pain-avoiding psychological denial

25 Cognitive Biases - Bias 21 Senescence-Misinfluence Tendency

Bias 21 – Senescence-Misinfluence Tendency

As we age there is a natural loss of certain skills and abilities. Continuous thinking and learning helps to slow the decay.

25 Cognitive Biases - Bias 22 Authority-Misinfluence Tendency

Bias 22 – Authority-Misinfluence Tendency

Following orders just because someone says so. Living in dominance hierarchies as he does, man was born mostly to follow leaders, with only a few people doing the leading. And so, human society is formaly organized into dominance hierarchies.

25 Cognitive Biases - Bias 23 Authority-Misinfluence Tendency

Bias 23 – Twaddle Tendency

This is basically spending too much time on nonsense

25 Cognitive Biases - Bias 24 Reason-Respecting Tendency

Bias 24 – Reason – Respecting Tendency

25 Cognitive Biases - Bias 25 Lollapalooza Tendency

Bias 25 – Lollapalooza Tendency

The Tendency to Get Extreme Confluences of Psychological Tendencies Acting in Favor of a Particular Outcome