Charlie Munger spent a lifetime studying

why humans make horrible decisions.

The result?

A list of 25 of the most powerful

psychological tendencies known to man.

If you want to avoid bad decisions, here

are 25 nuggets worth your time:

8.4k Likes 2.1k Retweets 117 Replies

Reward and Punishment

We are driven both conciously and

subconsciously by incentives and tend to
drift into immoral behaviour as a result.

“Never, ever, think about something else

when you should be thinking about the
power of incentives.”
Liking/Loving

We judge in favour of people and symbols

we like, or ignore their faults.

When dealing with those who clearly

benefit from your liking, check whether
you've been influenced.

Don't distort the facts of a situation to

comply with your liking.
Disliking/Hating

We distort facts to facilitate hatred or

disdain.

Take opinions and behaviours at face

value rather than in the veil of your
disliking or hatred for someone or
something.

Think logically about arguments, not

emotionally about senders of arguments.
Doubt/Avoidance

The tendency to make quick, poorly

thought-out decisions during stressful
situations.

We feel pressure to remove doubt, and

this causes ill-informed choices.

When stressed, control this by scheduling

deliberate delays to strategize before
reaching a decision.
Inconsistency-Avoidance

We like to be consistent in everything we

do, say, and everything we are.

To save energy, we are often reluctant to

change our habits, especially bad ones.

These patterns lead to cognitive errors,

limiting our choice of actions in life.
Curiosity

We like to call other species curious, but

we are the most curious of all.

Without the human curiosity instinct,

science and technology would not be
present.

Even before there were direct incentives

to innovate (capitalism), humans
innovated out of curiosity.
Kantian Fairness

We pursue and believe in perfect fairness

in the world.

Stop expecting the world to be fair and

adjust your behaviour accordingly.

Bad things happen to good people and

good things happen to bad people: this is
the way of the world.
Jealousy/Envy

We dislike those who make us feel our

own inferiority.

Jealousy involves a triangle of

relationships.

Envy involves the self and another.

“It is not greed that drives the world, but

envy.” Warren Buffett
Reciprocation

The tendency to reciprocate actions

others have done towards us.

A culturally and societally enshrined

phenomenon: "One should treat others as
they would like to be treated."

Beware of ill-intentioned actions or

relationships that feel transactional.
Influence-from-Mere-Association

We perceive people or things differently

depending on who/what they are
associated with, or from our past
experiences with them.

Treat things on face value, not

associations.

Everything has the right to an

independent evaluation.
Simple, Pain-Avoiding Psychological
Denial

We distort facts for our own

psychological comfort.

This psychological comfort is known as

cognitive dissonance.

We should face the truth more often: It's

better to deal with problems before they
become bigger problems.
Excessive Self-Regard

We naturally tend to overestimate our

own abilities.

A healthy amount of humility can keep

you from assuming you know everything.

It helps to cultivate relationships with

people who aren’t afraid to tell you when
you’re wrong or need to check yourself.
Overoptimism

We tend to have blind faith in a good

outcome or we don't pay enough
attention to the potential for a bad
outcome.

Optimism motivates us to pursue our

goals but must be balanced with
pragmatism.

Consider what could go wrong and plan

accordingly.
Deprival-Superreaction

If our freedom, status, money or anything

we value is lost, we will over-react in a
negative manner.

This effect is even greater when we

almost have something but then lose it.

Don't let your reaction cloud your

judgement of the next best steps.
Social-Proof

In the face of uncertainty, we look to

others for answers as to how we should
behave, what we should think and what
we should do.

Occurs due to our natural desire to 'fit' in

with the crowd.

However, we should always question

whether the crowd is wrong.
Contrast-Misreaction

We 'see' and 'perceive' less with

simultaneous exposure to two objects of
lesser or greater value in the same
dimension.

Think of two product pricing options side-

by-side.

Antidote: Evaluate people and objects

individually and not by their contrast.
Stress-Influence

Stress is good, up to a point, but will then

amplify the other biases.

Light stress can slightly improve

performance—say, in examinations—
whereas heavy stress causes
dysfunction.

Limit your major decisions while over-

stressed, or de-stress first.
Availability-Misweighing

We rely on information that is easy to

recall or top of mind when making
decisions.

When decision-making, gain different

perspectives and relevant statistical
information rather than relying purely on
first judgments and emotive influences.
Use-It-or-Lose-It

Our skills and knowledge decline over

time if unused.

Skills and knowledge that have been

mastered will depreciate more slowly
than skills that haven't.

You can prevent this tendency by

constantly using what you can’t afford to
lose.
Drug-Misinfluence

Substance addiction—or overuse—can

lead to an extremely unrealistic denial of
reality.

When influenced, people tend to believe

that they remain in respectable condition,
with respectable prospects.

Stay away from situations or people that

could lead here.
Senescence-Misinfluence

As we get older, our mental abilities

decline.

It’s going to happen to all of us—there's

no stopping it.

However, it may be possible to slow the

decline by continuing to think and learn as
you age, so make a commitment to never
stop learning.
Authority-Misinfluence

We trust and are influenced by leaders or

authority figures too much.

Experts aren't always right.

Influencers don't always have valuable

opinions.

Your boss doesn't own your thinking.

Take opinions on their logic, not their sender.

Twaddle

Humans waste a lot of time talking about

nothing at all or by scrolling through
Instagram, Facebook and Twitter, and
suddenly realizing an hour has passed.

Value your time.

Create artificial barriers to time wasting if

you need to get serious work done.
Reason-Respecting

We treasure the importance of reasons

regardless of their credibility.

Providing meaningless or incorrect

reasons will increase compliance with
directions or requests.

When requesting something, add on

"because" and watch compliance go up.
Lollapalooza

Extreme consequences arising from

combinations of psychological biases
acting in favor of a particular outcome.

For example, auctions can generate foolish

behaviour (ending in regret), because of
social proof, loss aversion (FOMO),
commitment, and action bias.
Thanks for reading!

What else would you add? Let

us know in the comments.

Follow me for more content like

this.