I was listening to Poor Charlie’s Almanack and it’s a witty and self-aware compendium of speeches full of advice Charlie Munger wants to impart upon anyone who would listen.
One of the more interesting aspects is his idea of checklists for everything. To paraphrase him: Pilots have a checklist for everything before they take off: so should you when approaching any complex scenario.
In one speech, he fully detailed his personal checklist for the Psychology of Human Misjudgment. For a full breakdown, complete with examples, I really recommend reading the 2005 revision here. There is also the full transcript from the original 1995 talk here.
For a large list, see the Wikipedia List of Cognitive Biases.
It looks like this:
- Reward and Punishment Superresponse Tendency Incentives are aggressively important.
- Liking/Loving Tendency We put effort towards things or people we like or love, sometimes causing a feedback loop. We ignore faults, like associated things, and distort facts in a Confirmation Bias way.
- Disliking/Hating Tendency Opposite to liking/loving. We ignore virtues, dislike associated things, and distort facts in a Confirmation Bias way.
- Doubt-Avoidance Tendency We like to avoid doubt, sometimes too quickly. We make snap judgments, and sometimes don’t do the hard work in order to reach a conclusion more quickly.
- Inconsistency-Avoidance Tendency People tend to distort facts or change their actions to be in line with their beliefs. People tend to stick with their current beliefs. Think also of Cognitive Dissonance, which is popularly talked about.
- Curiosity Tendency Humans and animals alike are curious. We like to explore.
- Kantian Fairness Tendency We tend to work together, even with no incentive to, even with no expectation of future reward. Think about queueing, or cars down a one-way street.
- Envy/Jealously Tendency We tend towards comparison and envy/jealousy. Munger considers this to be very strong and runs deep in our culture - many stories of tragedies begin with envy. He cites one of the ten commandments. He also discusses how it seems a taboo topic.
- Reciprocation Tendency We tend towards tit-for-tat behaviour. We return favours or return hostility.
- Influence-from-Mere-Association Tendency Association bias. We like things that remind us of other things, presumably as a form of pattern-recognition compression linked to (1) Reward and Punishment. Don’t shoot the messenger. Stereotypes.
- Simple Pain-Avoiding Psychological Denial We deny painful facts.
- Excessive Self-Regard Tendency We over-estimate ourselves. Pride. Endowment Effect, we value things and ideas that we made (or think we made, in the case of idea injection).
- Overoptimism Tendency We are optimistic by default. We underestimate risk. We neglect the possibility of small but disastrous events such as Natural Disasters. An extension of (11) Pain-Avoiding denial into the imagined future.
- Deprival-Superreaction Tendency We hate the taking-away of something we had, or something we believed we were about to have. Includes items, includes structured belief of ideas (paired with (5) Inconsistency Avoidance). Munger sees this happen everywhere: Auctions, gambling, stock buying and selling, exploding offers.
- Social-Proof Tendency We tend to follow what others do, good or bad. We use Social Proof to choose brands to buy. In essence, we have a natural belief in the Wisdom of the Crowd and a compulsion not to stand out. Leads to effects like Bystander Effect.
- Contrast-Misreaction Tendency We constantly compare things for reference. Think overpriced add-ons for an expensive car or holiday or phone. A small leak will sink a great ship but may not be noticed.
- Stress-Influence Tendency We make bad decisions under stress. Munger discusses Pavlov’s dog experiments in great detail; the dogs massively shifted in behaviour when subjected to high stress, and they stayed in that new way.
- Availability-Misweighing Tendency We prefer things or information that are easy to get, and ignore things or information that is hard. “An idea or a fact is not worth more merely because it is easily available to you.” Think also of bikeshedding.
- Use-It-or-Lose-It Tendency Skills fade and need daily practise.
- Drug-Misinfluence Tendency Drugs can be destructive in many aspects.
- Senescence-Misinfluence Tendency Old age brings cognitive decline, at different times for different people. It can be kept at bay with constant learning, and accumulated wisdom and knowledge will lessen the negative impact.
- Authority-Misinfluence Tendency We follow leaders, for bad or good. Munger cites the destruction of Germany by Hitler. Maybe a combination of effects: (4) Doubt Avoidance Tendency, (5) Inconsistency Avoidance, (15) Social Proof tendency.
- Twaddle Tendency We produce unimportant slop which only distracts. Think again of bikeshedding.
- Reason-Respecting Tendency We like reasons to be given for things. Munger cites an experiment: People were able to “successfully jump to the head of the lines in front of copying machines by explaining their reason: “I have to make some copies.””. Similar to (22) Authority-Misinfluence Tendency, as reasons have their own authority.
- Lollapalooza Tendency—The Tendency to Get Extreme Consequences from Confluences of Psychology Tendencies Acting in Favor of a Particular Outcome Many extreme psychological effects are simply built from combinations of these tendencies. Munger believes this is often overlooked. Some combinations are very powerful.
If you’re looking for the quick version of Munger’s Checklist, here it is:
- Reward and Punishment Superresponse Tendency
- Liking/Loving Tendency
- Disliking/Hating Tendency
- Doubt-Avoidance Tendency
- Inconsistency-Avoidance Tendency
- Curiosity Tendency
- Kantian Fairness Tendency
- Envy/Jealously Tendency
- Reciprocation Tendency
- Influence-from-Mere-Association Tendency
- Simple Pain-Avoiding Psychological Denial
- Excessive Self-Regard Tendency
- Overoptimism Tendency
- Deprival-Superreaction Tendency
- Social-Proof Tendency
- Contrast-Misreaction Tendency
- Stress-Influence Tendency
- Availability-Misweighing Tendency
- Use-It-or-Lose-It Tendency
- Drug-Misinfluence Tendency
- Senescence-Misinfluence Tendency
- Authority-Misinfluence Tendency
- Twaddle Tendency
- Reason-Respecting Tendency
- Lollapalooza Tendency—The Tendency to Get Extreme Consequences from Confluences of Psychology
I sat down for a while and I have some of my own to add, all of which are well-known in popular culture. I don’t pretend that these are particularly original, but I do think they are worthy additions to the list:
- Confirmation Bias
- Nostalgia Effect Effectively (10) Association, but the known effect of nostalgia makes people like/love things more in the past, amplifying the effect.
- Time-saving/laziness Tendency
- Waiting Avoidance/ Immediacy Tendency Think of the Two Marshmallows experiment.
- Mathematical Intuition failure Examples: Phone contracts over 36 months, underestimating interest rates on loans, difficult to compare 1.1^10 vs 1.05^20 and what the value really is (it’s around 2.6). Causes bad decisions.
- Tiredness Misinfluence Similar to drug misinfluence, but no drugs are necessary for sleep deprival. New parents should know this effect well.
- 90% vs 100%: Looks the same at a glance. Needs improvement We tend to either not see, or not recognise the importance of, the last 10% of work needed. It looks the same from a glance and this misinforms our opinions. Think of 3D mockups making a project look good, Demos looking great in theory but never make into a real product.
- Selfishness/close-circle benefit tendency. There’s a well-known idea of circles of closeness. It goes roughly in order of self-family-friends-neighbourhood-area-country-world.
- Boredom avoidance Boredom is a killer. In one study, people press a button that gives them an electric shock simply because they have nothing else to do.
- Novelty Desire We crave novelty; think Tiktok short videos taking the world by storm.