‘The Psychology of Human Misjudgment by Charles T. Munger PREFACE When I read transcripts of my paychology talks given shout fffeen yeats ago, I sealized that I could now cre te a more logical but mach Joager “tall” inciuding ost of what I bad earlier said. But T immediately «awe fous big disadvantages. ies, the longer “tall,” because it was written out swith more logical completeness, would be more bosing fied confusing to many people than any calor tall. This ‘would happen because I would use idiosyncratic defini tions of psychological tendencies in 2 manner reminis- ‘cent of both psychology textbooks and Raclid. And wha seads cextbooks for in or revisits Buclid? Second, because my formal psychological knowl ‘edge came only from skimming theee psychology text- books abour Steen yeats ago, I know visually nothing about any acidemic psychology later developed. Yet, in fa longer talk containing guestes, I woukd be criticizing uch acidemic psychology. This sort of intrusion into a professional tertory by an amateur would be sure to be resented by professors who would sejoice in Gnding my cexzors and might be prompted to respond to my pub- lished exicism by providing theirs. Why should I care about acw ericism? Well, who Hes new hostility from ‘tticalate entice with en information advantage? TThisd, a longee vetsion of my idese would susely deaw come distpproval from people formerly disposed to like me. Not only would there be stylistic and cub- stantive objections, but alco there would be perceptions fof arrogance in an old man who displayed much diste- gard for conventional wisdom while “popping-off" on a subject in which he hed never taken a course. My old Harvard Law classmate, Ba Rothschid, always called such a popping-off “the shoe button complex,” named forthe condition ofa family friend who spoke in omex- Jar style on all subjects afer becoming dominant in the shoe button business. Routh, T might make a fool of myself: Despite these four very considerable objections, I decided to publish the muchespanded version. Thus, afer many ‘lecades in which T have succeeded mostly by restricting action to jobs and methods in which I was unlikely 10 Fail, Thave now choten a cousse of action in which (1) I have no significant personal benefit to gain, (2) 1 will surely give tome pain to family members and fiends, sad (3) I may make myself sdiculous. Why am I doing his? ‘One reason may be that my aarure makes me in- ine towed diagnosing and taking about errs in con ventional wiedom, And despite years of being smoothed cout by the har mocks that were inevitable for one with ray attitude, I don’t believe life ever knocked all the boy's baashness out ofthe man. ‘A second reason for my decision is my approval of the ane of Diogenes when he asked: “OF wha uses t plage he ever offs eyhody?™ Ty the ad fal von he ange. have flea nove wth my wey of ring ut pyeology be Cause bs boon soe foe esd oy ete de, Twat osteo some etn the esi peices of tite cate: de propo a Joke Bunyan Bk gpm Progeery, Behn Pela, aed yet ems Ployes Bent Bote Banya’ charter, the ight nual sumed “Old Vane for Teh? ml the Tp pata begun valle to hn when e ns 3 the ead of hii “My sword Tava ‘rer "And ke his, td mad iT havea tppraied my sword, proved The dt en oe trey hat any ot ith to py tat sm tbo iy to weld tay fd i wee tho ot Boo Fark co my grt befitting pigs is mons sod mich ces And Ernest Batt Slike tet be could in the same mode when he let behind “low to Ran » Geocey So an a Fer Thigs {Have Learned about Fishing” Wheto or ht Contin to te genres the bet Il oto But Tl epee tat Ihave aw known fe gene Sons of Econ Buffers descendants ad that he ter have encostged my iiaon ofthe aude hve lng btn very tre in soda hk lng azo: Howevey Ione edited in tae Shes ‘Be combo of oor patenting pycology to to undertaadeg, of mipaigment met Ide appeal fom members ofthe mainte elite Insexd tres in pchology was pcty well conned tos group of profesor tho nied ated pobished mos fr ae teres with much natural dimen fom slaon sod (ropa Aod vo, ight after mp te waked aed Fitrnd Lay Schoo, pomenel + mat inornce of peycology. Tote isttione fled ores kno {ifs oft jee Andy of cove thy cold ee gps poychlogy with th other bert mater when {Rey dda imow poycholog ko, He he Nitache charcer wow pod of isle the vont Sve pou ofthe Will aroance of ny” ey Rolo and hay” prchology profesor Teed tt oract anne for 2 conidenble time: And oo dit of oer people, What ae we 0 think for instanceof the Cae conte catgut for yous ted it one peydulogy profesor, se desctbed ata “Proestor of Prychamalieal Side,” ho tight bath "Abn Prchsogy and Dayco seals tease’? "Soon af: leaving Hara Tega a loose to gerd of he mot dynein ps of my pape: Tegal gnoance Toy wil ecb ry long ogo fr eet wicom a ae! ware of en ing notion. Aber that, Iv pie examples, many gute ‘rian intresting to ne, of book paholgy st work tod antidotes ro pyshology sed dysuneson The, “lend by sling snd enoweng sone gee ietsraised by what I have aid. This wll be along alk. ‘When I stated law practice, Thad respect forthe power (oF genetic evolution zed appreciation of man’s many fevolution-hased resemblances to less cognitvely-gifted animals and insects, I was avace that man was a “social animal,” greaty and automatically infuenced by behav- Jor he observed in men azound bir. I also knew that ‘man ved, lke baenyasd animals and monkeys, a limited size dominance hierarchies, wherein be tended 10 re- spect authority and to like and cooperate with his own Inieraschy members while displaying considersble dis- trust and dislike for competing men notin his own hier- axchy. But this generalized, evelotion-based theony strac- tute was inadequate to enable me to cope properly with the cognition 1 encountered, I was soon surrounded by much extreme ieeaionalry, displayed! in patterns and subpatteros. So surrounded, I could see chat T was not joing to cope as well as [wished with life unless I eoold fequite a better theory-stactire on which to kang my Observations and experiences. By then, my exaving for ore theory had 2 long history. Partly, I had abvays loved theory at an aid in puzzle solving aod as a means of satisfying my morkey-like eatiosity. And, pet. Thad found thae theory-structare was a supespower in helping ‘one get what one wanted. As I had extly discovered in school wherein I had excelled without labor, guided by theory, while many others, without mastery of theory, Tailed despite monstrous effot. Better theory, I thought. had slwaye worked for me and, if now avaiable, could niake me acqute capital and independence faster and Deiter assist everything I loved. And so T slowly devel ‘oped ty own ayttem of psychology. more or less in the seléhelp style of Ben Fraaldia acd with the detesmina- tion displayed in che sefrain of the nursery story: “Then Tl doit myself ssid che litle ed hen” Twas gready helped in my quest by two tums of ‘mind. First, [had long looked for insight by inversion in the intense manner counseled by the great algebrist, Jacobi “Inver, alwys invest” T sought good judgment ‘mostly by collecting instances of bad judgment, then. poadesing ways to avaid such outcomes. Second, I be- ame so avid collector of instances of bad judgment that I psd no attention to boundaies between profes sional texrories. Afer all, why should I search for some tiny, important, hard-to-find new stupidity in my own Fie when some large, important, easy-to find stupidity was jst over the fence in the other fellow’ professional tersitony? Besides, I could already see that real-world problems didn’ nesly le within teitorial boundacies "They jumped right across. And I was as dubious of any approach that, when (wo things were inexticably inter- twined and interconnected, would ty and think about fone thing but aot the othes. I was aftaid, if T tied any such testicted approach, thar T would end up, io the jmmortal words of Joha L. Lewis, “with no besin at al, just a neck that had haired over.” Pore curiosity, somewhat later, mate me wonder how and why destrvtive cults were often able, over 8 Single long weekend, to tin many tolesably normal people into brsiawashed zombies and thereafter keep them in that state indefinitely. T resolved that 1 would ‘eventually find a good answer to this enlt question if L ‘could do so by general reading and much masing 1 also got curious about social insects. Ie fascinated sme that both the fertile female honeybee and the fertile female haevester ant could snultiplytheie quite diferent ‘notmal life expectancies by exactly twenty by engaging in one gangbang ia the sky. The extreme success of the ants also fascinated me-how a few behavioral algorithms ‘caused such extreme evolutionary success grounded in ‘extremes of cooperation within the breeding colony and, almost always, extremes of lethal hostly toward ants ‘rside the breeding colony; even ants of the same spe- ‘Motivated as I was, by midlife I should probably have tamed to psychology textbooks, but I didn't, dis- playing my share of the outcome predicted by the Ger rman folk saving: "We are too #001 old and too late smart” However, as [later found out, 1 may have bee Icey to avoid for so long the academic peychology that ‘vas then Inid out in most textbooks. These would not thea have guided me well with respect to cults and were often written ab if the authors were collecting psychol ‘ogy expesiments at a boy collets butterles-with a pas sion for more butterflies and more contact with fellow collectors and Ltle exaving Cor synthesis in what is al ready possessed. When I finally gor to the psychology texts, [was reminded of the observation of Jacob Vine, the great economist, chat many an academic is ike che tmafle hound, an afimal so tzined and bred for one nastow purpose that its no good at anything ese. Iwas also appalled by hundzeds of pages of extremely nonsci- entific rmsing about comparative weights of nature and ‘nurture in human outcomes. And I found that introduc tory psychology text, by and Iago, didn’t deal appropz ately with a fundamental issue: Psychological tendencies tend to be both numerous and inseparably intertwined, now and foveves, a they interplay in life. Yet the com- ‘plex parsing out of effects from intertwined tendencies ‘vas usually avoided by che writers of the elementary tests, Possibly the authors did aot wish, dhrough com- plexity to repel entsy of new devotees to their discipline. ‘And, possibly the enute of their inadequacy was the one ‘given by Samuel Johnsoa in response to a woman who Inquleed as to what accounted for his dictionary’ misde finition of the word “pastern.” “Puce ignorance,” Jol: son replied. And, finaly, the text writers showed bite fnverest in describing standard antidotes to standard peychology-driven folly, and they thus avoided most sscussion of exitly what most interested me. ‘Bat academic psychology has some very important _metits alongside its defects. [ leaned this eventual, inthe course of gene! reading, from book, Iyfen, aimed at a popular audience, by a distinguished psychol- ey professor, Robert Cialdini, at Adizona State, a very big university. Caldini had mide himself into 2 soper- tenured “Regents’ Professor" at a very young age by devising, deseabing, snd explaining a vast group of Clever expesiments in which man manipulated man to his detsiment, With all of this made possible by man’s intsinsic thinking Daw. immediately seat copies of Cialdin?’s book to all ‘my childeen. T also gave Cialdini a share of Berkshire stock [Cliss A] to thank hirm for what he had done for te aad the publi, Incidentally, the sale by Cialdini of hhandteds of thousands of copies of « book aboat social psychology was a huge fest, considering that Cialdint tida’t claim that he wns going t9 impzove your sex life cormake you any money. Past of Cinkdini’s large book:-buying audience came because, like me, it wanted to learn how to become lest ‘often ticked by salesmen and ciscumstances. However, 48 an outcome not sought by Cialdini, who is a pro- foundly ethical man, a huge number of his books were bought by saleemen who wanted to learn how to be- come more effective in misleading customers. Please remember this perverse outcome when my discussion ‘comes to iacentive-caused bias as a consequence of the ‘perpower of incentives. ‘With the push given by Cialni’s book, I soon skimmed through dcee much used textbooks covering introdc- tory psychology. T also pondeced considerably while caving synthesis and taking into account all my peevi- ‘ous training aad experience. The result was Munger’s partial surnmary of the non-patient-treating, son-natare vs. nuttare weighing pexts of aondevelopmental psy cology. This matedal wis stolen from its various dis- coverets (most of whose ames I did not even try to learn), offen with new descriptions and tiles elected so fr Monger’s notion of what makes recall exsy for ‘Munger, then revised to male Munger’s use easy a8 he seeks to avoid errors Twill stat my curry with 2 general observation that helps explain what follows. This observation is grounded in what we know about socal insects. The Limitations inherent in evolution’s development of the rervoussystem calls that control behavior are beauti- filly demonstrated by these insects, which often have a mere 100,000 or to cell je their entize nervous systems, ‘compared to man’s multiple bilions of cells ia his brain lore. Each aot, lke each human, is composed ofa living physical stracace plus belaviorl algosthms in its nexve cells. In che ant’ eat, the behavioral algorithms are few fn number and almost nicely genetic in origin. The ant Teams a litle behavior fiom experiences, but mostly it ‘metely responds to tea ot #0 stimuli with « few simple responses programmed into its nervous system by its ‘genes, sometimes wall round and round watil hey per- toh Tr seams obvious, to me at least, that the human brain must often operate counterproductively just like the ans, from unavoidable oversimpliciry in its mental alt stall in trying to solve problems eoxe difficult than those faced by ants thar don't have to de- sign aisplancs. Naturally, the simple ant behavior system hat ex tucme limitations because of its limited aerve system repertoise. For instance, one type of ant, when it smell ‘ pheromone given off by a dead ant’s body inthe hive, Jmmediatey retponds by cooperating with other ants in carrying the dead body out of the hive And Harvard's reat E.O. Wilson performed one of the best psjchol- ‘ony experiments ever done when he painted dead-ant pheromone on a live ant. Quite naturally; the other ants fdragged this useful ve ant out of the hive even though je Ticked and otherwise protested threughout the entice process. Such i the bain ofthe ant. It has a simple pro- ‘gam of responses that generally work out all ight, but ‘which aze impradently used by zoe in many eases. “Another type of ant demonstrates that the limited bain of ants can be misled by ciccumstances as well 25 by clever manipulation from other ereatures. The brain of this ant contains a simple behavioral program that dlisects the ant, when walking, to follow the ant ahead, tnd when theee ante stamble ito walking in a big cicle ‘The perception syetem of man cleusly demonstrates just, such an unfornunate outcome. Man is exlly fooled, ei- ther bythe cleverly though out manipulation of man, by circumstances occurring by accident, or by very effective ‘manipulation practices thst man has sturnbled into dor ing “practice evolution” and kept in place because they ‘work so well. One suck outcome is caused by @ quanturn effect in human perception. If siimulus is kept below a cermin level, it does not get through. And, for this rea- son, a snagiian was able to make the Starue of Liberty cGsappear afer 2 cestain amount of magician lingo ex- presed in the dark The audience was not aware that it twas sicting on a platform that was rotating <0 slowly, bhelow man’s sensory threshold, that ao one could fel the acceleration implicit in the considerable rotation. ‘When a sumounding curtain was then opened in the pice on the platform where the Stame had eatier ap peared, it seemed to have disappeared. ‘And even when pereption does get through to ‘man’s bin, it ie often misweigheed, because whar is ogsteted in perception ie in shockingness of apparent conttast, oot the standard scientific units chat make pos: tlble scieace and good engineering against often-wrong effects from generally useful tendencies in his percep tion and cognition. ‘A magician demonstrates this sort of contrast based ‘ecot in your nervous system when he removes your ‘wrispwatch without your feeling it. As be docs this, he applies pressure of touch on your wrist that you would