Psychology of Human Misjudgment Summary (All 25 Biases)

The Psychology of Human Misjudgment by Charlie Munger was originally a speech delivered in the mid-1990s.

If you’re interested in listening to a version of that speech, here you go:

A decade later in 2005, Charlie Munger made extensive updates to The Psychology of Human Misjudgment for the third edition of the book Poor Charlie’s Almanack (Book Summary | Amazon):

This post is a summary of all 25 psychological tendencies from the revised and updated version of The Psychology of Human Misjudgment that’s included in the book. Charlie Munger says:

“The tendencies are probably much more good than bad. Otherwise, they wouldn’t be there, working pretty well for man, given his condition and his limited brain capacity. So the tendencies can’t be simply washed out automatically, and shouldn’t be. Nevertheless, the psychological thought system described, when properly understood and used, enables the spread of wisdom and good conduct and facilitates the avoidance of disaster. Tendency is not always destiny, and knowing the tendencies and their antidotes can often help prevent trouble that would otherwise occur.”

Quick Housekeeping:

All quotes in quotation marks are from the original author unless otherwise stated.
I’ve added emphasis in bold for readability/skimmability.

Summary Contents: Click a link here to jump to a section below

**25 Psychological Tendencies from The Psychology of Human Misjudgment by Charlie Munger (Speech Summary)**

1. Reward and Punishment Superresponse Tendency

“Never, ever, think about something else when you should be thinking about the power of incentives.”

“We should also heed the general lesson implicit in the injunction of Ben Franklin in Poor Richard’s Almanack: ‘If you would persuade, appeal to interest and not to reason.'”
“One of the most important consequences of incentive superpower is what I call ‘incentive-caused bias.’ A man has an acculturated nature making him a pretty decent fellow, and yet, driven both consciously and subconsciously by incentives, he drifts into immoral behavior in order to get what he wants, a result he facilitates by rationalizing his bad behavior.”

2. Liking/Loving Tendency

“Man will generally strive, lifelong, for the affection and approval of many people not related to him.”

“What will a man naturally come to like and love, apart from his parent, spouse and child? Well, he will like and love being liked and loved.”
“One very practical consequence of Liking/ Loving Tendency is that it acts as a conditioning device that makes the liker or lover tend (1) to ignore faults of, and comply with wishes of, the object of his affection, (2) to favor people, products, and actions merely associated with the object of his affection (as we shall see when we get to ‘Influence-from-Mere-Association Tendency,’ and (3) to distort other facts to facilitate love.”
“The phenomenon of liking and loving causing admiration also works in reverse. Admiration also causes or intensifies liking or love. With this ‘feedback mode’ in place, the consequences are often extreme, sometimes even causing deliberate self-destruction to help what is loved.”

3. Disliking/Hating Tendency

“In a pattern obverse to Liking/Loving Tendency, the newly arrived human is also ‘born to dislike and hate’ as triggered by normal and abnormal triggering forces in its life.”

“Disliking/Hating Tendency also acts as a conditioning device that makes the disliker/hater tend to (1) ignore virtues in the object of dislike, (2) dislike people, products, and actions merely associated with the object of his dislike, and (3) distort other facts to facilitate hatred.”

4. Doubt-Avoidance Tendency

“The brain of man is programmed with a tendency to quickly remove doubt by reaching some decision.”

“What triggers Doubt-Avoidance Tendency? Well, an unthreatened man, thinking of nothing in particular, is not being prompted to remove doubt through rushing to some decision. As we shall see later when we get to Social-Proof Tendency and Stress-Influence Tendency, what usually triggers Doubt-Avoidance Tendency is some combination of (1) puzzlement and (2) stress.”

5. Inconsistency-Avoidance Tendency

“The brain of man conserves programming space by being reluctant to change, which is a form of inconsistency avoidance. We see this in all human habits, constructive and destructive.”

“The rare life that is wisely lived has in it many good habits maintained and many bad habits avoided or cured. And the great rule that helps here is again from Franklin’s Poor Richard’s Almanack: ‘An ounce of prevention is worth a pound of cure.’ What Franklin is here indicating, in part, is that Inconsistency-Avoidance Tendency makes it much easier to prevent a habit than to change it.”
“Also tending to be maintained in place by the anti-change tendency of the brain are one’s previous conclusions, human loyalties, reputational identity, commitments, accepted role in a civilization, etc.”
“People tend to accumulate large mental holdings of fixed conclusions and attitudes that are not often reexamined or changed, even though there is plenty of good evidence that they are wrong.”

6. Curiosity Tendency

“In advanced human civilization, culture greatly increases the effectiveness of curiosity in advancing knowledge.”

“Curiosity, enhanced by the best of modern education (which is by definition a minority part in many places), much helps man to prevent or reduce bad consequences arising from other psychological tendencies. The curious are also provided with much fun and wisdom long after formal education has ended.”

7. Kantian Fairness Tendency

“Kant was famous for his ‘categorical imperative,’ a sort of a ‘golden rule’ that required humans to follow those behavior patterns that, if followed by all others, would make the surrounding human system work best for everybody.”

8. Envy/Jealousy Tendency

“Envy/jealousy is extreme in myth, religion, and literature wherein, in account after account, it triggers hatred and injury.”

“My guess is that people widely and generally sense that labeling some position as driven by envy/ jealousy will be regarded as extremely insulting to the position taker, possibly more so when the diagnosis is correct than when it is wrong. And if calling a position ‘envy-driven’ is perceived as the equivalent of describing its holder as a childish mental basket case, then it is quite understandable how a general taboo has arisen.”

9. Reciprocation Tendency

“The automatic tendency of humans to reciprocate both favors and disfavors has long been noticed as extreme … The tendency clearly facilitates group cooperation for the benefit of members.”

“What both human and ant history suggest is (1) that nature has no general algorithm making intraspecies, turn-the-other-cheek behavior a booster of species survival, (2) that it is not clear that a country would have good prospects were it to abandon all reciprocate-disfavor tendency directed at outsiders, and (3) if turn-the-other-cheek behavior is a good idea for a country as it deals with outsiders, man’s culture is going to have to do a lot of heavy lifting because his genes won’t be of much help.”
“Like other psychological tendencies, and also man’s ability to turn somersaults, reciprocate-favor tendency operates to a very considerable degree at a subconscious level. This helps make the tendency a strong force that can sometimes be used by some men to mislead others, which happens all the time.”

10. Influence-from-Mere-Association Tendency

“The most damaging miscalculations from mere association do not ordinarily come from advertisers and music providers. Some of the most important miscalculations come from what is accidentally associated with one’s past success, or one’s liking and loving, or one’s disliking and hating, which includes a natural hatred for bad news.”

“People disagree about how much blindness should accompany the association called love. In Poor Richard’s Almanack Franklin counseled: ‘Keep your eyes wide open before marriage and half shut thereafter.’ Perhaps this ‘eyes-half-shut’ solution is about right, but I favor a tougher prescription: ‘See it like it is and love anyway.'”
“The proper antidote to creating Persian Messenger Syndrome and its bad effects is to develop, through exercise of will, a habit of welcoming bad news.”
“A final serious clump of bad thinking caused by mere association lies in the common use of classification stereotypes.”

11. Simple, Pain-Avoiding Psychological Denial

“The reality is too painful to bear, so one distorts the facts until they become bearable.”

“We all do that to some extent, often causing terrible problems. The tendency’s most extreme outcomes are usually mixed up with love, death, and chemical dependency.”
“In chemical dependency, wherein morals usually break down horribly, addicted persons tend to believe that they remain in respectable condition, with respectable prospects. They thus display an extremely unrealistic denial of reality as they go deeper and deeper into deterioration.”

12. Excessive Self-Regard Tendency

“We all commonly observe the excessive self-regard of man. He mostly misappraises himself on the high side.”

“Even man’s minor possessions tend to be overappraised. Once owned, they suddenly become worth more to him than he would pay if they were offered for sale to him and he didn’t already own them. There is a name in psychology for this overappraise-your-own-possessions phenomenon: the ‘endowment effect.’ And all man’s decisions are suddenly regarded by him as better than would have been the case just before he made them.”
“Excessive Self-Regard Tendency diminishes the foolish bettor’s accuracy in appraising his relative degree of talent.”
“There is a famous passage somewhere in Tolstoy that illuminates the power of Excessive Self-Regard Tendency. According to Tolstoy, the worst criminals don’t appraise themselves as all that bad. They come to believe either (1) that they didn’t commit their crimes or (2) that, considering the pressures and disadvantages of their lives, it is understandable and forgivable that they behaved as they did and became what they became.”
“The best antidote to folly from an excess of self-regard is to force yourself to be more objective when you are thinking about yourself, your family and friends, your property, and the value of your past and future activity. This isn’t easy to do well and won’t work perfectly, but it will work much better than simply letting psychological nature take its normal course.”

13. Overoptimism Tendency

“Man displays not only Simple, Pain-Avoiding Psychological Denial but also an excess of optimism even when he is already doing well … an excess of optimism being the normal human condition, even when pain or the threat of pain is absent.”

“One standard antidote to foolish optimism is trained, habitual use of the simple probability math of Fermat and Pascal, taught in my youth to high school sophomores.”

14. Deprival-Superreaction Tendency

“I include the natural human reactions to both kinds of loss experience—the loss of the possessed reward and the loss of the almost-possessed reward—under one description, Deprival-Superreaction Tendency.”

“The quantity of man’s pleasure from a ten-dollar gain does not exactly match the quantity of his displeasure from a ten-dollar loss. That is, the loss seems to hurt much more than the gain seems to help. Moreover, if a man almost gets something he greatly wants and has it jerked away from him at the last moment, he will react much as if he had long owned the reward and had it jerked away.”
“In displaying Deprival-Superreaction Tendency, man frequently incurs disadvantage by misframing his problems. He will often compare what is near instead of what really matters.”
“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 thing.”
“It is almost everywhere the case that extremes of ideology are maintained with great intensity and with great antipathy to non-believers, causing extremes of cognitive dysfunction. This happens, I believe, because two psychological tendencies are usually acting concurrently toward this same sad result: (1) Inconsistency-Avoidance Tendency, plus (2) Deprival-Superreaction Tendency.”

“An automatic tendency to think and act as man sees others around him thinking and acting.”

“Triggering most readily occurs in the presence of puzzlement or stress, and particularly when both exist.”
“Because both bad and good behavior are made contagious by Social-Proof Tendency, it is highly important that human societies (1) stop any bad behavior before it spreads and (2) foster and display all good behavior.”
“In social proof, it is not only action by others that misleads but also their inaction. In the presence of doubt, inaction by others becomes social proof that inaction is the right course.”
“Social-Proof Tendency often interacts in a perverse way with Envy/Jealousy and Deprival-Superreaction Tendency.”

16. Contrast-Misreaction Tendency

“Because the nervous system of man does not naturally measure in absolute scientific units, it must instead rely on something simpler. The eyes have a solution that limits their programming needs: the contrast in what is seen is registered. And as in sight, so does it go, largely, in the other senses. Moreover, as perception goes, so goes cognition. The result is man’s Contrast-Misreaction Tendency.”

“Contrast-Misreaction Tendency is routinely used to cause disadvantage for customers buying merchandise and services. To make an ordinary price seem low, the vendor will very frequently create a highly artificial price that is much higher than the price always sought, then advertise his standard price as a big reduction from his phony price.”
“When a man’s steps are consecutively taken toward disaster, with each step being very small, the brain’s Contrast-Misreaction Tendency will often let the man go too far toward disaster to be able to avoid it. This happens because each step presents so small a contrast from his present position.”

17. Stress-Influence Tendency

“Everyone recognizes that sudden stress, for instance from a threat, will cause a rush of adrenaline in the human body, prompting faster and more extreme reaction. And everyone who has taken Psych 101 knows that stress makes Social-Proof Tendency more powerful.”

“In a phenomenon less well recognized but still widely known, light stress can slightly improve performance—say, in examinations—whereas heavy stress causes dysfunction.”
“But few people know more about really heavy stress than that it can cause depression. For instance, most people know that an ‘acute stress depression’ makes thinking dysfunctional because it causes an extreme of pessimism, often extended in length and usually accompanied by activity-stopping fatigue.”

18. Availability-Misweighing 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 it. And so the mind overweighs what is easily available and thus displays Availability-Misweighing Tendency.”

“One consequence of this tendency is that extra-vivid evidence, being so memorable and thus more available in cognition, should often consciously be underweighed while less vivid evidence should be overweighed.”
“The great algorithm to remember in dealing with this tendency is simple: An idea or a fact is not worth more merely because it is easily available to you.”

19. Use-It-or-Lose-It Tendency

“All skills attenuate with disuse.”

“Throughout his life, a wise man engages in practice of all his useful, rarely used skills, many of them outside his discipline, as a sort of duty to his better self. If he reduces the number of skills he practices and, therefore, the number of skills he retains, he will naturally drift into error from man with a hammer tendency.”
“The hard rule of Use-It-or-Lose-It Tendency tempers its harshness for the diligent. If a skill is raised to fluency, instead of merely being crammed in briefly to enable one to pass some test, then the skill (1) will be lost more slowly and (2) will come back faster when refreshed with new learning. These are not minor advantages, and a wise man engaged in learning some important skill will not stop until he is really fluent in it.”

20. Drug-Misinfluence Tendency

“This tendency’s destructive power is so widely known to be intense, with frequent tragic consequences for cognition and the outcome of life, that it needs no discussion here to supplement that previously given under Simple, Pain-Avoiding Psychological Denial.”

21. Senescence-Misinfluence Tendency

“With advanced age, there comes a natural cognitive decay, differing among individuals in the earliness of its arrival and the speed of its progression.”

“Practically no one is good at learning complex new skills when very old. But some people remain pretty good in maintaining intensely practiced old skills until late in life.”
“Continuous thinking and learning, done with joy, can somewhat help delay what is inevitable.”

22. Authority-Misinfluence Tendency

“Living in dominance hierarchies as he does, like all his ancestors before him, man was born mostly to follow leaders, with only a few people doing the leading. And so, human society is formally organized into dominance hierarchies, with their culture augmenting the natural follow-the-leader tendency of man.”

“But automatic as most human reactions are, with the tendency to follow leaders being no exception, man is often destined to suffer greatly when the leader is wrong or when his leader’s ideas don’t get through properly in the bustle of life and are misunderstood. And so, we find much miscognition from man’s Authority-Misinfluence Tendency.”

23. Twaddle Tendency

“Man, as a social animal who has the gift of language, is born to prattle and to pour out twaddle that does much damage when serious work is being attempted.”

“Some people produce copious amounts of twaddle and others very little.”
“It’s a very important part of wise administration to keep prattling people, pouring out twaddle, far away from the serious work.”

24. Reason-Respecting Tendency

“There is in man, particularly one in an advanced culture, a natural love of accurate cognition and a joy in its exercise.”

“This tendency has an obvious implication. It makes man especially prone to learn well when a would-be teacher gives correct reasons for what is taught, instead of simply laying out the desired belief ex cathedra with no reasons given. Few practices, therefore, are wiser than not only thinking through reasons before giving orders but also communicating these reasons to the recipient of the order.”
“Unfortunately, Reason-Respecting Tendency is so strong that even a person’s giving of meaningless or incorrect reasons will increase compliance with his orders and requests.”

25. Lollapalooza Tendency

“The tendency to get extreme consequences from confluences of psychology tendencies acting in favor of a particular outcome.”

“This tendency was not in any of the psychology texts I once examined, at least in any coherent fashion, yet it dominates life.”

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**25 Psychological Tendencies from The Psychology of Human Misjudgment by Charlie Munger (Speech Summary)**