Charlie Munger, in his quest for more effective decision-making and a better understanding of human behavior, has identified and discussed various cognitive biases that can influence our thinking and decision-making processes. He has spoken extensively about these biases in his speeches and writings and believes that recognizing and understanding these biases can help individuals make better decisions and avoid common pitfalls in thinking.
- Confirmation Bias: People tend to seek out and favor information that confirms their existing beliefs while ignoring or discounting conflicting information.
- Incentive-Caused Bias: The idea that people can be influenced by financial or other incentives to make biased decisions.
- Liking/Loving Bias: People are more likely to be biased in favor of individuals they like or love, which can cloud their judgment.
- Disliking/Hating Bias: Conversely, people may be biased against individuals they dislike or hate, leading to poor decision-making.
- Social Proof: People often follow the crowd or mimic the behavior of others, even if it’s not rational or appropriate.
- Reciprocity Bias: People tend to feel obligated to reciprocate favors or gifts, which can influence their decisions.
- Misjudgment of Risk and Probability: Munger emphasizes the importance of understanding probability and risk in decision-making and how people often misjudge these factors.
- Bias from Over-Influence by Authority: People can be overly influenced by authorities or experts, even when their advice is flawed or biased.
- Bias from Deprival-Superreaction Tendency: When people feel they are losing something, they tend to react strongly to try to prevent further losses.
- Bias from Envy/Jealousy: Envy can lead to irrational decisions or actions driven by a desire to have what others have.
- Bias from Chemical Dependency: Munger points out how substance abuse can cloud judgment and lead to poor decision-making.
- Bias from Sensation-Seeking: People may engage in risky behavior to seek novel or thrilling experiences, which can lead to poor choices.
- Bias from the Availability Heuristic: People often rely on readily available information when making decisions, even if it’s not representative or accurate.
- Bias from Anchoring: The tendency to rely too heavily on the first piece of information encountered when making decisions.
- Bias from Sunk-Cost Fallacy: People often continue to invest time, money, or effort into something because they’ve already invested in it, even when it no longer makes sense.
- Bias from Self-Serving Bias: Individuals tend to attribute positive outcomes to their own actions and negative outcomes to external factors, which can lead to overconfidence.
- Bias from Overoptimism: People are often overly optimistic about their own abilities or the outcomes of their decisions.
- Hindsight Bias: After an event has occurred, people tend to believe they predicted it was going to happen all along.
- Bias from Not-Invented-Here Syndrome: The belief that one’s own ideas or solutions are superior to external ones, leading to resistance to change.
- Bias from Contrarianism: Some individuals have a bias toward opposing prevailing opinions, even when those opinions are rational.
The Fenland Conversation 