17: Charlie Munger’s Guide to Better Decisions: The Psychology of Human Misjudgments Made You Think

I had found that theory was a superpower in helping one get what one wanted, as I had early discovered in school where I had excelled without labor, guided by theory. While many others without mastery of theory, failed, despite monstrous effort.
In this episode of Made You Think, we discuss The Psychology of Human Misjudgments. This was a “speech” compiled by Charlie Munger from three other speeches he gave, digging into a toolkit that he uses to make sure he’s not being fooled by his mental biases. He digs into each of the 25 biases that adversely affect your thinking in work and life, and how we might watch out for them in order to make better decisions ourselves. We managed to dig into *almost* all of them during the show.

A list of all 25 cognitive biases can be found here.
We covered...
The 25 cognitive biases that lead to poor decision making. Breaking down each of these biases and applying them. How these biases can positively or negatively affect everyday life. Benefiting from these biases and noticing yourself using them. And more. Please enjoy, and be sure to check out The Psychology of Human Misjudgments!
If you enjoyed this episode, be sure to listen to our episode on Antifragile by Nassim Nicholas Taleb, to learn how to profit from chaos, and our episode on How to Think Like Elon Musk, to learn how to emulate Musk’s way of thinking for extreme advantages.
 
  Be sure to join our mailing list to find out about what books are coming up, giveaways we're running, special events, and more.
Mentioned in the show:
Berkshire Hathaway [0:55] Joe Rogan Podcast [4:10] Neil’s article on The Optionality Trap [7:22] Xerox [9:47] Stripe [12:10] Made You Think episode 15 (The Goal) [16:54] Sratechery [27:15] Pro-Neutrality, Anti-Title II article [27:15] Bookinabox [52:01] David and Goliath [56:24] Carnegie Mellon [56:49] Revisionist History [58:25] Wesley college [58:31] Modafinil [1:03:37] Made You Think episode on Cryptocurrency [1:10:03] Preston Byrne’s blog [1:11:40] AVC.com [1:14:52] Books mentioned:
The Psychology of Human Misjudgments Amusing Ourselves to Death [0:31] (Nat’s Notes) (episode on the book) Poor Charlie’s Almanack [0:43] Principles [5:16] (Nat’s Notes) (episode on the book) The Goal [17:00] (Nat’s Notes) (episode on the book) Emergency [24:49] (Nat’s Notes) (episode on the book) Influence [50:45] Giftology [52:04] Peak [55:35] (Nat’s Notes) Outliers [59:12] Harry Potter [1:21:16] The Inner Game of Tennis [1:22:19] (Nat’s Notes) (episode on the book) People mentioned:
Elon Musk [0:27] (How to Think Like Elon Musk episode) Charlie Munger [0:37] Warren Buffett [0:53] Joe Rogan [4:10] Ray Dalio [5:16] (Principles episode) LeBron James [47:38] Robert Cialdini [50:45] E.O. Wilson [50:56] Zak Slayback [52:03] Malcolm Gladwell [55:38] Anders Ericsson [55:40] Steve Faloon [57:04] Leo Tolstoy [1:00:30] Nassim Nicholas Taleb [1:10:58] (Antifragile episode) Preston Byrne [1:11:40] Taylor Pearson [1:11:42] Adil Majid [1:13:45] Fred Wilson [1:14:46] 0:00 - Introductory quote, a bit of background on this episode, and a bit on the author Charlie Munger.
4:46 - How the speech is basically structured and what the goals of the speech are.
9:19 - The first of the 25 cognitive biases that lead to poor decision making, which is thinking about incentives above everything else. Also, a few examples on business infrastructure flaws and companies in general. “In your company, if you’re incentivizing people to tell you bad news instead of good news, that is so important.”
17:12 - The second of the 25 cognitive biases, the liking and loving tendency. “If they love this person, they will gloss over the bad parts.” (Tangent at 19:10) Some thoughts on the psychological influences in various mass shootings such as tumors and neurological issues, and on mass shootings in general.
25:34 - The third cognitive bias, the disliking and hating tendency. “However