Prejudices and false psychology of human

Human thought is similar with human eggs: egg has a "closed" system, when a sperm into the post, it "closed", and the rest of the sperm will not come into; human thought in general have such features. Among those at the high level of ignorance of basic psychology is quite significant. Prejudice from the people and our commitment to the consistent tendency, sometimes the truth is too cruel, people unbearable. So we twisted it and it is becoming affordable. -Psytopic.com

This article selected from Munger in 1995 speech at Harvard Law School, it appears not on the investment, just talk about the circumstances under which people make wrong judgments, but that is a great investor (or entrepreneur) the most needs, that is, how to do anything too much wrong decisions.

Charlie Munger's open, so that the value of Buffett's investment in the field has been more profound release. Even Buffett himself admitted: "Charlie put me into another direction, as Graham did not just recommend a bargain, this is his power of thought, he broadened my horizons. I unusual unusual speed evolution from apes to humans, otherwise I would much poorer than now. "

If the business comes down to decision-making and implementation of the outcome of the interaction of two forces, then the executive power in the people are constantly stressed today the importance for the decision itself is clearly not enough. Charlie Munger's famous quote: "I want to know where I will die, then I'll not go there." When all investors to "fear" and "greed" to explain the capital market when all the non-rational behavior to find a more open and more extensive interpretation of the behavior of the framework, will undoubtedly help all people to re-examine themselves and the market itself.

Points outlined:

1. Underestimate the psychologist calls "enhanced" or what economists call "incentive" of power.

2. Simple psychological denial: Sometimes, the truth is too cruel, people unbearable. So, you twist it and it is becoming affordable.

3. The prejudice caused by the excitation, pre-existing is to themselves and their trusted advisers mind, it creates what economists call "agency costs."

4. The error caused by the psychological tendency to have a super power: bias from consistency and people tend to stick to commitments, including to avoid or promptly resolve cognitive dissonance tendency, as well as all the conclusions - particularly has publicly expressed or hard-won conclusion - the tendency of self-recognition.

5. From the "Pavlovian association" of bias, distortion across the relevance of a decision-making. When you see a Coca-Cola ad ... ... link to the real onset of the.

6. From the "returns tend to" generated bias. Including a person would follow other people's expectations of his tendency to act. Your ideas may change your approach, but more important may be that your approach will change your mind.

7. By social proof (that is, the conclusions of others, especially in the natural conditions of uncertainty and the weight of the conclusions arising under) the prejudice resulting from the excessive influence.

8. Economists love the efficient market theory is that the math is too beautiful. They have forgotten that the great economist John Maynard Keynes once said: "rough right than precisely wrong."

9. Contrast resulting feeling, feelings and perceptions are distorted due to bias after. When you change a little bit closer, you may not be perceptible.

10. Authority figures caused by the excessive influence of prejudice. Endowed with the human tendency to obey authority, even if this subject is wrong.

11. "Deprived Super reaction syndrome" caused by bias. People really crazy obsessed with those insignificant "reduction"; people have and the loss can not make a balanced response.

12. Envy / jealousy lead to bias. Buffett said more than once: "Not greedy, but jealousy pushing the world forward."

13. Drug dependence lead to bias. Drug dependence will always lead to moral collapse, so it does not always recognize its impact.
14. "Erroneous gambling enforcement" caused prejudice.

15. Like distortion caused by prejudice, including especially like oneself, these people, their knowledge structure, and extremely easy to be misled by their tendency to like people and not from where you do not like people tend to learn the correct . George Bernard Shaw's novel "Doctor's Dilemma" has a role, said: "After all, every professional is the conspiracy against the outsider."

16. From the mathematical properties of the human brain bias Africa. If you quickly toward a thing, then the tendency of consistency and our commitment will be to lock this thing on you.

17. Was fresh evidence of the additional impact caused by excessive bias.

18. Since the theoretical framework of knowledge and information can not handle the current confusion caused by thinking. We all know some people who failed the exam, they memorize test questions and re-test once, but then failed again ... ... that is not used, not by the brain to work that way.

19. Feeling, memory, perception and knowledge of the limitations caused by prejudice.

20. Caused by the pressure of the spirit of change (some small, there is a permanent and temporary).

21. Other common temporary or permanent mental illness.

22. "Stance syndrome" (say-something syndrome) the development and organization of chaos.

Munger 1995 speech at Harvard Law School, the body:

I am very interested in the subject of human misjudgment - God knows, I have created false positives has been small - but I do not think I ever had the misjudgment to have "create" finished. I think on this one of the reasons is that I try to resolve what the Harvard Law School graduate, I did not solve the problem.

Me aware of irrational mankind has established models, but this irrational so extreme, I can without any theory to explain and solve, but I see how it extreme, but also see it has a certain pattern. I just started creating my own system of psychology, with a small part by reading, the majority from personal experience, I used this model to help you safely in this life. Later, I happened to read the "influence" of the book, the author is a psychologist Mingjiaobaobo check Er Dini. The book has now sold more than 30 million copies, indeed extraordinary. This is a book for ordinary readers of the theory, it has filled many of my rough system of loopholes. Was it to fill in these loopholes, I think I have established a set of their own system, the system is a good tool to use, I would like to share with you.

1. Underestimate the psychologist calls "enhanced" or what economists call "incentive" the power of the

You can say this thing, "well known", but I also think that people my age in my life are in the best understanding of "stimulating" the power of the top 5% of the list. Every year, I will surprised to find that I have the cognitive are increasing.

FedEx is my favorite example of the "incentive" effect of one case. The company's internal systems and effective operation of the core is: every night, all the packages must be from a central location with quick shipping out, and if the entire transportation process was not quick enough, the system also a problem. However, before the normal operation, FedEx has gone through a bad period, they try to moral persuasion, have tried all means to the world. Finally, some people come up with a coup: They payment by the hour for night shift workers. Shift according to different circumstances, if paid, the system runs more good. You see, this approach has become effective.

At Harvard, B · F · Skinner is a real will "strengthen" the people as a powerful tool. His experiment is very creative, experimental results are "counter-intuitive," but these conclusions are important. Skinner's reputation is ruined I call the "hammer syndrome get" things: For a people who hold a hammer, every problem looks like a nail. The Skinner is an extreme academic history. Some smart people also suffer from this syndrome. We will explore why people suffer from this syndrome.

2. Simple psychological denial

The first things that struck me greatly, is a friend of my family, and her master has a super-physical, the son of super-good grades, from the North Atlantic after taking off from a flying aircraft carrier, it never came back. His mother, a woman of sound mind, never believed he was dead. Of course, if you turn on the TV, to find that the apparent criminal offense mothers who have never thought that his son is innocent. This is psychological denial. Sometimes, the truth is too cruel, people unbearable. So, you twist it and it is becoming affordable. We will do so in a way. This is a terrible problem of common psychological misjudgment.

3. The prejudice caused by the excitation, pre-existing is to themselves and their trusted advisers mind, it creates what economists call "agency costs"

"Bias" exists in any of the fields, and any one person, and will lead to terrible acts. I have 70 years of age, but had never seen anything away from objective truth, only one step away. To experience the power of incentives and rational behavior but terrible power, evidenced by the following examples: In the Department of Defense and then in the costs of the additional contract costs of practice has hundreds of times, our response is found in federal law in this kind of behavior is a crime, and is a felony.

Incidentally, the government is right, but the world - including many law firms and other places - a lot of running one of the ways that the cost of the additional costs added outside the system. And human nature, I call "incentive caused bias", has greatly contributed to the spread of such practices.

Human thought is that this way, a great demonstration of the fact, people who invented the cash register is our civilization's most effective saints - the cash register makes it difficult to implement immoral behavior, every cash register is a great moral instrument. NCR's founder Patterson (John Patterson) about it. He has a small shop, people steal from him, harm him always make money. Later, he was sold to two cash registers, shop immediately profit. Of course, he closed shop and began trading in the cash register ... ...

4. The error caused by the psychological tendency to have a super power: bias from consistency and people tend to stick to commitments, including to avoid or promptly resolve cognitive dissonance tendency, as well as all the conclusions - particularly has publicly expressed or hard-won conclusion - the tendency of self-recognition

Human thought is very similar to human eggs. Egg has a "close" mechanism. When a sperm into the post, it "closed", and the rest of the sperm entered is not coming. Human thought in general have such features. Not only ordinary people have this tendency, Dean of the School of Physics also have this tendency. According to Max Planck (Max Planck, the famous physicist) to say, the real innovation, important new physics theories have never really been a defender of the old theories are acceptable. But the new theory, the theory of the past rarely refused. Planck described the crowd if there is such a consistent and our commitment tendency makes them tightly grasp the natural conclusion, even if there is already evidence that it does not set up, you can imagine you and I are one of them How would this crowd behavior.

Of course, if you open your conclusion, it means you put the conclusions into his brain heavy. Many students shouted down on us, but they are not convinced us that it is in strengthening their own ideas, precisely because they shouted loudly into their own brain. I think it is educational institutions have created a climate in which this popular ... ... basically, they are irresponsible organization. In the young, do not be something you shouted confined living brain, it is very important.

5. From the "Pavlovian association" of bias, distortion across the relevance, as the basis for decision-making

I have never been to psychology or economics courses, but I do go to school than in high school biology Pavlov. How they teach you know, like dog heard the bell began to flow of saliva. So what? No one (even with minimal effort) it with the wide world together.

The fact is that in all our daily lives, "Pavlov Legend" is a huge, powerful psychological force. I think that three quarters of the commercials are totally dependent on Pavlovian theory at work. Lenovo is how pure role? Think Coca-Cola, they all want pleasant company and the scene link: Olympic sports heroes, beautiful music, all these. They do not want associated with the president's funeral. When you see a Coca-Cola ad ... ... link to the real onset of the.

All of these psychological tendencies, most or all are in the subconscious state of completion, which makes them very insidious. Now, you are suffering from "Hualazaimo messenger syndrome." Hualazimo ancient kings of Central Asia, the messenger of bad news would bring death. Do you think this situation has disappeared yet? Then you should look at Bill Paley (CBS Chairman and former CEO) of the last 20 years of life - he does not listen to any one he did not want to hear the news. People know that if the messenger to bring Bill Paley is that he does not want to hear the message, the messenger will be in trouble. This means that leaders put ourselves in a non-reality, this is a great giant company, but he did in the past 20 years, made some foolish decisions.

Now, "Hualazaimo messenger syndrome" is still alive. I think that no one wants to bring bad news executives. So the best way is to do as Hualazimo messenger, leave and go into hiding rather than bring home the news of the defeat.

Speaking of economics, in my long lifetime, it happened again and again to see a very interesting phenomenon. You have two products, assuming they are all very complex technology products. Now you will think, according to economic principles, if the cost of the product A is X dollars, Y product cost is lower than X dollars, then, Y more than X product will sell if the price is even worse. Is not the case. In many cases, raise the price of alternative products after they get the market share is greater than the price lower than competing products to get market share. But in fact, economists have only recently discovered this more apparent than the truth.

6. From the "returns tend to" generated bias. Including a person will follow the expectations of other people to act on his tendency to

In this respect, Charlie Er Dini has done quite well. Charles Er Dini called "submissive participant" of the kind of people, it is vulnerable to fraud. In any case, "tend to return" is a very, very powerful phenomenon. Charles Er Dini experiment to demonstrate it through a power: he went to a campus for people to take juvenile delinquents to the zoo, an average of every six people in a promised his request. He has accumulated some data in the following. In the same campus, he asked other people: "Hey, are you willing to sacrifice in the week to accompany a juvenile for two afternoons to walk around somewhere?" Results, 100% of the respondents rejected him. But in asking this question, he stepped back and then asked: "Then you can extract at least an afternoon to accompany juveniles to the zoo?" At least half the people agreed. Adopted this "first and then give a lot of" strategy, his success rate is three times previously.

Now, if the human will in the subconscious state of being manipulated in this way, but after her unaware, I often say is: "Do you like only one leg to go to a kick ass game man." I mean, you really put a lot of time on your external world can not afford. In this so-called "role theory", the other people what you expect, you tend to form what action, if re-think about how society is organized, you know, this is the reward.

Called Zimbardo (Zimbardo), a psychologist who did a test at Stanford, he participate in the experimenter divided into two groups to play the police, a group of prisoners to play. Two groups of people to the way people look to their role into action. Five days later, Zimbardo had to stop the experiment because the guards became sadistic and prisoners became very depressed. In the beginning, the experimenter is normal and friendly students. The trial into the so-called devil's classic tutorial situation, even if a good man to be put to the bad environment, it may become a beast. I mean ... ... this too must the experiment. However, Zimbardo has been seriously misinterpreted. Cause the results of this experiment, not only tend to return and the role of theory, there are consistent and our commitment also played a role in the tendency. Everyone, regardless of whether he played the police or the prison, will perform into the brain.

No matter where you are, this consistency and tendency to adhere to commitments that affect you. In other words, your thoughts might change your approach, but more important may be that your approach will change your mind. You can say that everyone knows this. I want to tell you is that I am not as early as possible, as much as possible to understand this truth.

7. By social proof (that is, the conclusions of others, especially in the natural conditions of uncertainty and the weight of the conclusions arising under) the prejudice resulting from the excessive influence

In this regard, psychologists have used a case is an example of Miss Kitty Jane Nuowei Si. In 1964, she was assassinated by criminals Adam Street. There were 50 or 60,70 personal presence, I do not know how many people saw up to half an hour she was gang chased the process, but no helping hand extended by a witness, and no one even called the police . One explanation is that everyone else can see no action, so naturally produce such a community that: doing nothing is the right approach. According to my assessment, with reasons to explain this example of Jane Nuowei Si is not enough, it only partly. Micro-economic thinking and gain / loss ratio which also played a role. I repeatedly thought, in reality, the concept of psychological concepts and economic interaction. Who neither understand this is simply a damn fool.

Some big merchants have also been involved in these waves of social proof. Remember a few years ago it? An oil company bought a fertilizer company, and then, every major oil companies have bought a fertilizer company ran. In fact, these oil companies is no more reason to buy fertilizer companies, but they do not know how to do. If the Exxon oil company to do so, and Mobil oil companies have enough reason to do so, and vice versa. This is a disaster.

Earlier, I talked about strengthening the power - you do something, then a rising market, you get remuneration, incentives and acclaim, etc. This way of doing things then you will be greatly enhanced. But here too there is social proof at work, the stock market ups and downs is the community that the ultimate form of expression, it is entirely the reflection of other people's minds. These two effects combined will produce great power, how can you think that the level of the whole stock market is efficient? Even in 1973-74 the overall market into a downturn, Yihuo 50 in 1972, the heyday of large companies? If these psychological concepts are correct, you should think, is an irrational wave of waves leading the market trend changes.

8. Economists love the efficient market theory is that mathematics is too beautiful a

After all, mathematics is something they learn and master. For a person who took hammer, every issue is very like a nail. In addition there will be a little truth to them at a loss, they have forgotten that the great economist John Maynard Keynes once said: "rough right than precisely wrong."

9. Contrast resulting feeling, feelings and perceptions are distorted due to bias after

Charles Er Dini has done a great experiment: He took three buckets of water, a bucket of hot water, a bucket of cold water, a bucket of water at room temperature. He asked a student to his left hand into the water, the right hand into the cold water, then put both hands simultaneously into the water at room temperature. Of course, one hand feeling hot, feeling cold in the other. This is because the human sense organs in sharp contrast to the over-under the impact. Temperature scale is not absolute, only relative temperature, but also in which quantum effects.

Charles Er Dini cited examples of the real estate broker. If a country folk come to town you buy a house, you first have to do is take him to the two most expensive house you've ever seen before, and then take him to see some middle-expensive house, and finally you will be able to buttoned him. This approach is very effective salesperson to do this is the reason, it always works.

I have a friend, by the heritage of the living. He once told me that if I am good enough. He said: "Charlie, if you put a frog into boiling water, it will immediately jump out. But if you put it in warm water, then water slowly heated, eventually, it will be boiling water die. "I do not know the frog will really like what he says is so. But I know a lot of business like that of. This is the contrast phenomena (contrast phenomenon). But they are more powerful body of the great. I mean, they are not moron. When you change a little bit closer, you may not be perceptible. So, if you want to become a good sense of people, you have to contrast these in your mind because of the distortion produced by some reactions.

10. Authority figures over the prejudice caused by the influence

Papers on the Milgram psychology experiments about 1600. In this experiment, the authority of a play, he told his subjects, they must continue to lend full of innocent people electric shocks. Surprisingly, even by the experimenter started getting nervous and shaken, when they were ordered to lend the maximum electric shock when more than two-thirds of people would follow suit. Milgram experiment show that Hitler wanted to how successful this experiment is indeed captured the imagination of the world. Milgram experiment from the point of view, the Nazi crime and it is not hard to understand Hitler's success. Partly due to the excessive political correctness and authority influence. Endowed with the human tendency to obey authority, even if this subject is wrong.

You might like this example: two pilots, one is a, is the driver is an authority figure. They do not have the plane, but in a state of complete in the simulation of this experiment. Co-pilot to be trained in the simulation state for a long period of time, he knows his job is to prevent the crash. The experiment, that is the driver could have done something stupid enough to see out the operation led to the crash. But the co-pilot just sat quietly, because driving his authoritative role. 25% of cases, the plane will crash.

11. "Deprived super response syndrome" (deprival super-reaction syndrome) lead to bias. Including the lack of immediate or potential prejudice caused, including possible for almost already have or have never have been deprived of something

I have a neighbor, the old-timers around the house with a small island, and his next door neighbor planted on that island a little pine tree, about three feet high. Previously, veteran who can see his 180-degree view of the port front of the house, with the strains of trees, his vision became a 179 and 3 / 4 degrees. Since then, the two have forged feud, this hatred continues.

I mean, people really crazy obsessed with those insignificant "reduction." If you have some action, you tend to fall back into the exchange. Because you not only exchange and friendly, you will exchange hatred, and everything will be upgraded. So much from the crazy people are subconsciously to losing things, or almost have not any to get something too seriously.

In this regard, the New Coke (New Coke) is an extreme business case. Coca-Cola is the world's most valuable brand. Coca-Cola has a lot of smart engineers, lawyers, psychologists and advertising executive and so on. In the past 100 years, they spent a lot of time for people to believe that the intangible value of trademarks tremendous. It will mark with a taste of this link.

But when they said the outside world, "improved the taste", which is difficult for consumers to accept. Taste is related to experience. What I mean is that you can improve a kind of detergent or something, but I think you can not taste what a big change. So they had these huge "super-response deprivation syndrome." Results fiasco!

By the way, Goizueta (Goizuetta, Coke was the CEO) and Keogh (Don Keough, Coke when he was president) are intelligent and interesting people, but it is wise to make these terrible, stupid mistake. Now you understand the "deprivation of super-reaction syndrome" power, right? But people have to and loss of balance can not make the response.

12. Envy / jealousy lead to bias

Brothers and sisters have been raising, or business law firms, investment banks and even the experience of people who run the factory, would understand the word envy. I have heard more than once, Buffett said: "not greedy, but jealousy pushing the world forward."

You went to visit a psychology survey courses, in the index to find on the "envy / jealousy," the tome, but you can not find. In this regard, there are some blind spots in academia, but it really is a strong force things. Envy and jealousy are largely operate in the subconscious. Every person who does not understand it emerged that they should not have a number of shortcomings.

13. Bias caused by drug dependence

We do not have to discuss this topic. We have all seen too much. But interestingly, drug dependence will always lead to moral collapse, so it does not always recognize its impact. We talked about that in a previous pilot missing son's example, it will be distorted reality in order to make himself acceptable.

14. "Erroneous gambling enforcement" led to bias

In this regard, you can program in a standard psychological survey found Skinner made his only explanation. Of course, he created his pigeons and rats, a variable rate enhancement. He found that this model than any other force can better influence the behavior. He said: "Ha, I have to explain why gambling in a civilized society, so powerful and addictive." In my view, to a large extent, what he said was true. But Skinner seems to think that this is the only explanation, but the fact is that modern machines and those who know a lot of legacy technology, Skinner did not know things.

If you play slot machines, you will get the fence, fence, walnut. It happened again and again. All this makes you think you will soon win, this is the "deprivation of super-integrated joint response to disease." God, ah, who invented this machine to understand human psychology it? For bright people, they Nenggen poker machine to play the game need to make their own choices, such as "21 point." We use computers to destroy civilization, how wonderful.

In any case, "erroneous gambling enforcement" is a very, very powerful and important things. Look at our country is happening: at each Indian has a private plots, each Town in, look at what those stockbrokers and others who destroy people. If you go to access the standard psychology textbook, introduced in this regard, you almost can not find anything.

15. Like distortion caused by prejudice, including especially like oneself, these people, their knowledge structure, and extremely easy to be misled by their tendency to like people and not from where you do not like people tend to learn the correct

Let us also recall that "take hammer syndrome." Why "take hammer syndrome" has always existed? If you stop to consider the matter, this is the incentive caused bias. His professional reputation and his knowledge of theory completely tied together. He likes himself, he likes his own ideas, he expressed these thoughts to others, it is consistency and commitment tendency to adhere. I mean, four or five basic psychological tendencies combine to create this "take hammer syndrome."

Once you realize you can not really accept some of the ideas - you can accept a small part, but a large part of the world is unacceptable to you - you learn a life very useful lesson. George Bernard Shaw's novel "Doctor's Dilemma" has a role, said: "After all, every professional is conspiracy against the layman." But it does not say is correct, not so much a conspiracy, does not it is a subconscious mental tendencies more appropriate.

The book that the doctor tell you what is good for him, he considers his own approach to the treatment of cancer. He believes that he is against the devil is the biggest, most important of the devil, but in fact, he has to contend with the devil and your own face in comparison, may be very small. Therefore, in this world you get from paid consultants proposal is full of terrible prejudice. It is sad for you!

There are two solutions: you can hire your advisor, but that it should be corrective, and you shooting on target to take into account the impact of wind direction is a reason. Or you can learn you the basic principles of consultants in this industry, and you do not learn too much, because you only learn that, you can let him explain why he was right.

In my long life, I've never seen a management consultant's report which are not in the case at the end: "The current situation really needs is more management consulting." Every time it ends. I always like to directly turn the last page. Of course, Berkshire Hathaway did not hire these consultants. But I sometimes participate in the management of some non-profit institutions, where some fool would hire consultants.

16. From the mathematical properties of the human brain bias Africa

Coca-Cola to availability (availability) to upgrade to a secular religion. If the available properties to change behavior, you will drink a lot of Coke - Coke is always available if so. I mean, availability does change behavior and cognition. In a sense, the various psychological tendencies mentioned earlier, will reduce the availability of things. Because if you quickly toward a thing, then the tendency of consistency and our commitment will be to lock this thing on you.

I think we should talk about the former CEO of Salomon Brothers securities 约翰古特弗洛恩 special (John Gutfreund, 译注: Under his rule, Salomon Brothers was prominent among Wall Street financial institutions. But in 1991, Salomon was The CEO 古特弗洛恩特 hands of government bonds that the cause of head of the Department of the Treasury Paul Luo Moxi illegal bid, but not to treatment, after the matter was revealed, 古特弗罗恩特 banned for life Securities can not be held senior positions), he is a very interesting human example of. At least a generation's time, each of the orthodox teaching of the professional schools are examples of.

古特弗洛恩特 one he trusted staff, but once the staff were surprised to find (not frank) lying to the government, and false accounts, which is equivalent to forgery. The man immediately said: "I've never've done. I will no longer do not do it. It is unique again."

There are many forces in play to do the role of psychology. Do you know this guy's wife, while he was standing in front of you, you will generate sympathy. He asked you for help, which inspired the exchange effect. Effect occurred in a number of psychological tendency, coupled with the fact: He is to help you make a lot of money part of the team.

In any case, 古特弗洛恩特 not let him dismissed, of course, that guy had done before, his future will definitely do so.古特弗罗恩特 would look like now is to let him do it again. That simple decision destroyed 古特弗洛恩特, and make that decision very easy.

Community that incentives lead to prejudice, and so led to horrible acts of psychological tendency to spread ... ... your company will rot, civilization will be ruined. I travel abroad because someone used the opportunity to travel with his mistress while his dismissal, I know his wife and children, so I paid him severance pay. My mind is not adultery, but the private use of public funds.

17. To be extra fresh evidence of prejudice caused by the excessive influence

My wealth should have more than 30 million U.S. dollars today. I have bought 300 shares of a stock, that guy called me back, said: "I have 1,500 shares." I said: "You keep me for 15 minutes, I would think." In my life I seen many real live special case, but this man (he was that company's CEO) be regarded as breaking the world record. But I misjudged the situation.

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