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The Psychology of Human Misjudgment (2005) [pdf] (archive.org)
178 points by atomroflbomber on July 25, 2016 | hide | past | favorite | 39 comments



This is by Charlie Munger, Warren Buffett's less-public partner.

https://en.wikipedia.org/wiki/Charlie_Munger

There are two great books collecting his thoughts:

https://sivers.org/book/SeekingWisdom

https://www.poorcharliesalmanack.com/pca.php

His main quip is, "All I want to know is where I'm going to die, so I'll never go there."

It's meant metaphorically, in that his approach to success is mainly to just avoid mistakes.

(He's my hero.)


Thanks Derek.

Here's more information about Charlie Munger:

He lost his three year old son to cancer.

He has a glass eye due to a botched surgery.

He didn't start accumulating wealth until his late thirties.

He owns a huge catamaran boat: http://sbsail.com/wp-content/uploads/2015/11/011-IMG_0019.jp...

Also, Charlie frequently mentions inversion as one of the most powerful mental models.

Another powerful model says the models themselves can combine to have a multiplicative, "lollapalooza" effects.

In that, he stresses being multidisciplinary. To the man with a hammer, everything's a nail.

Combining ideas from philosophy, psychology, economics, finance, and even chaos theory--rationality is Charlie's highest virtue.

Here's a list of books Charlie recommends you read to gain insight into the Munger System.

http://www.mymentalmodels.info/charlie-munger-reading-list/

Poor Charlie's Almanac is fantastic. There's a story about Coca-Cola being a 2 trillion dollar company one day that will raise your eyebrows and give you insight into how they think about investments.

If you're like me and you can't get enough, kill a few hours with these:

https://www.youtube.com/watch?v=4ibabROYccs

https://www.youtube.com/watch?v=rEBX5z56WPs

https://www.youtube.com/watch?v=K6RS_PqudxU


Interesting. I've read quite a few of Buffett's year-end reports, I wonder how much of these are written by Munger? Their writing style seems to overlap a little.


Charlie influences Warren's style for sure. He edits the rough drafts and gives feedback to Warren.


And the amusing thing is during the meetings, while Warren is going to town on the podium, he just sits back and eats candy with this wry smile on his face...


"Nothing to add..."


Here's a web article version of this PDF, which I had converted some time back. There are some minor hyphenation issues, but otherwise I have fixed the formatting so that it shows up good on web and mobile displays.

Obviously, all credit goes to Charlie Munger. https://t27.github.io/to-read/MungerMisjudgement.html

I'll be glad to take PR's on the github repo for fixes to any errors that may have come up in the conversion of the PDF article


Oh that's much better.

How'd you do the conversion?


I found a pdf version which, unlike the link above, was not a scanned copy. It had the proper text. Used a web based pdf to doc converter, fixed some formatting and converted the .doc to html using libre office. To fix artifacts, fonts and other extra html, I used plain old regex based find and replace on Atom. Finally used the stackedit css for the fonts and styles.


Although this scan is quite readable, I did a cursory search for a cleaner PDF. Failed, but the first hit was a nice transcript of the original talk: http://www.rbcpa.com/mungerspeech_june_95.pdf

It's interesting that the material was heavily rearranged for 2005 version (submitted PDF scan), which is acknowledged at the end to be a combination and enhancement of three talks.



Indeed it does, thank you very much. Excuse me ...

^^^^^ BETTER PDF LINK ABOVE, GET THIS ONE ^^^^^

;-)


In section 17, Stress-Influence Tendency (p21-22), he mentions some final work by Pavlov, but doesn't provide a citation. I spent some time trying to find it when I first read this years ago, but was unable to. I'm wondering whether it's even reliable: I'd think that work by Pavlov could be found with him as an author, rather than in a "popular paperback" written by an un-named psychiatrist. If anyone knows what book he must have been talking about, or can point to the particular papers by Pavlov, I'd like to know.


Not sure if it is the case here at all. But sometimes those old Soviet-bloc "original research" documents can be hard to find. An example of this elsewhere is the Levenshtein distance -- everybody knows what this is, but the actual original document was a Soviet-era journal: Влади́мир И. Левенштейн (1965). Двоичные коды с исправлением выпадений, вставок и замещений символов [Binary codes capable of correcting deletions, insertions, and reversals]. Доклады Академий Наук СCCP (in Russian) 163 (4): 845–8. Appeared in English as: Levenshtein, Vladimir I. (February 1966). "Binary codes capable of correcting deletions, insertions, and reversals". Soviet Physics Doklady 10 (8): 707–710.


Given the productivity of Russian academics and the difficulty in obtaining a lot of these journals, has there been a concentrated effort to make these available for a modern, web-enabled audience?


That would be quite interesting to know actually.


Another possibility that occurred to me is that the subject matter of this particular paper is pretty unpleasant, perhaps any potential translators simply shied away from it.


""...popular paperback, written by some Rockefeller-financed psychiatrist, when I was trying to figure out..""

https://www.amazon.com/Battle-Mind-Brainwashing-Evangelists-...

"In 1938 Sargant was awarded a Rockefeller Fellowship" says author's wiki. I think this book fits the bill.


It does indeed seem to be the book. Thanks.

The author seems to be controversial. The Wikipedia entry on him [1] says things like "his reliance on dogma rather than clinical evidence have confirmed his reputation as a controversial figure whose work is seldom cited in modern psychiatric texts.", and others "described him as 'autocratic, a danger, a disaster' and spoke about 'the damage he did'".

[1] https://en.wikipedia.org/wiki/William_Sargant


Rom Harre's Pavlov's Dogs and Schrödinger's Cat (Oxford University Press) covers some of his experiments.

Daniel Todes' Biography of Pavlov presents some of the material as well.


You can also listen to him giving this speech here:

https://www.youtube.com/watch?v=pqzcCfUglws

I revisit this material every couple years. It's so easy to fall into these traps in your thinking.


I realize this is going to make me sound rather dull-minded, but despite the pdf sounding very interesting, I don't have much inclination to read 27 pages of it without knowing more. Can someone summarize the author's main thesis, and whether he's able to robustly justify that thesis with supporting evidence?


Main thesis is that people's behavior is not rational in specific ways, and can be better understood through a list of various "Tendencies" that people are subject to. There's a list of them on the bottom of page 4.

Supporting anecdotes are provided, but they don't prove anything.

Best case, this paper will help you organize, crystallize and clarify things you yourself have always known or noticed, but never had a name for.


The anecdotes leave me feeling that a person simply needs to ask, "is my behavior going to become a good or bad anecdote?"


I read a great comment once in response to a post about parental advice - roughly:

"When I was young, my father said to me, 'Son, don't be an asshole.' Since then, before doing anything, I ask myself, 'Would an asshole do this?' And if they would, I don't do it."


This is a collection of mental models Charlie uses to explain human behavior. It was basically behavioral psychology before the field exploded.

Definitely take the time to read it. While it isn't a peer reviewed piece of work, you'll agree with his justifications simply on the basis of agreeing that, Yup, that is indeed how people act.


I wouldn't say that's dull-minded - one of the things I like about HN is checking the comments first and seeing whether people vouch for a link or not. The "Cliff Notes" version is never a substitute for reading the whole thing yourself, but it might be enough to help decide if it's worthy of your time or something you wouldn't be interested in.


I skimmed it. It's a condensed summary of cognitive bias concepts similar to those in Thinking Fast and Slow, explored and justified through practical reasoning.


Sure, they totally did!

(And because you didn't read it, you'll never know if I'm bullshitting you or not. Don't outsource your thinking.)


> Don't outsource your thinking

Should he believe you or not? I'm baffled.


:)


That's like not reading reviews before going to a restaurant.


And there are good reasons to not read them, either.

I happen to like many ethnic foods and like exploring restaurants that I believe might be authentic. Those restaurants often have poor reviews because of customers who were there more for the dining experience than the food quality. Or they are expecting something that doesn't jive with the cuisine (eg. "that Filet Mignon was totally undercooked, and when they brought it back well done, it was so tough I couldn't eat it.").

So in many cases, restaurant reviews are useless to me.

Papers are similar in that I may be evaluating them under different criteria than those giving me the summary.


I mean, that's why you read them reviews, instead of just looking at the overall score. For the cases when the thing reviewed is actually shitty according to criteria you share, saving you the time and money.


Along the same vein, Daniel Kahneman's Thinking Fast and Slow does a comprehensive job of explaining why humans are really bad intuitive statisticians and how the systems in our brain make decisions. He's the authority on the subject and the book is revered by many in the psychology field and outside.


Thank you for posting this. I've read dozens of psychology books and articles. Even though they repeat the same principles, they are always a fun read. But I never apply them. Do people have guidance on how to start using this knowledge?


Best by taking failures honestly. Almost always psychological stuff can be discerned. Any failure will do, but bigger ones tend to be more edifying.


Is this speech available in a plaintext format for ease of reading? I couldn't seem to locate it.


This article was updated in 2005 according to end notes.




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