15. Bias from the non-mathematical nature of the human brain. [I’m paraphrasing this one] A boss catches an employee stealing from the cash register. The employee says, “I’ve never done it before and I’ll never do it again.” What are the odds that they’ve never done it before? Very small. But you biasedly ignore that probability because you like them. Munger says: “In the history of the See’s Candy Company they always say, ‘I never did it before, and I’m never going to do it again.’ And we cashier them. It would be evil not to, because terrible behavior spreads.”
16. Failure to obtain deserved influence caused by not properly explaining “why?” “We all know people who’ve flunked, and they try and memorize and they try and spout back. It just doesn’t work. The brain doesn’t work that way. You’ve got to array facts on the theory structures answering the question ‘Why?’ If you don’t do that, you just cannot handle the world.”
17. Bias from stress-induced mental changes. “[Pavlov] had all these dogs in cages, which had all been conditioned into changed behaviors, and the great Leningrad flood came and it just went right up and the dog’s in a cage. And the dog had as much stress as you can imagine a dog ever having. The water receded in time to save some of the dogs, and Pavlov noted that they’d had a total reversal of their conditioned personality. And being the great scientist he was, he spent the rest of his life giving nervous breakdowns to dogs, and he learned a helluva lot that I regard as very interesting.”
18. Development and organizational confusion from say-something syndrome. “A honeybee goes out and finds the nectar and he comes back, he does a dance that communicates to the other bees where the nectar is, and they go out and get it. Well some scientist decided to do an experiment. He put the nectar straight up. Way up. Well, in a natural setting, there is no nectar where they’re all straight up, and the poor honeybee doesn’t have a genetic program that is adequate to handle what he now has to communicate. And you’d think the honeybee would come back to the hive and slip into a corner, but he doesn’t. He comes into the hive and does this incoherent dance. All my life I’ve been dealing with the human equivalent of that honeybee. It’s a very important part of human organization so the noise and the reciprocation and so forth of all these people who have what I call say-something syndrome don’t really affect the decisions.”
Watch the whole video here. It’s well worth your time.
The article Charlie Munger’s 18 Biases That Cause You to Fool Yourself and Make Bad Decisions originally appeared on Fool.com and is written by Morgan Housel.
Fool contributor Morgan Housel has no position in any stocks mentioned. The Motley Fool recommends Berkshire Hathaway and The Coca-Cola Company (NYSE:KO). The Motley Fool owns shares of Berkshire Hathaway Inc. (NYSE:BRK.B).
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