Charlie munger on human misjudgment by charlie munger. They are not out of line with the content of this blog so i thought i would post them. This is the transcript of one of the speeches given by berkshire hathwayss very own, charlie munger at harvard law school, 1995, a truly brilliant investor and an intelligent man. Charlie munger on human misjudgement a wealth of common. Full text of speech the psychology of human misjudgement. In his speech, charlie talks about some of the different kinds of human misjudgments that he has encountered through his life. Charlie mungers the psychology of human misjudgment.
The psychology of human misjudgment by charlie munger. Below my own summary of his article on human biases or human misjudgment in his words. Munger preface when i read transcripts of my psychology talks given about fifteen years ago, i realized that i could now create a more logical but much longer talk, including most of what i had earlier said. And this talk on the psychology of human misjudgment is one of the best youll ever. Get a free pdf download checklist of the 25 cognitive biases and a special video interview with tai lopez, expert on the subject matter. Gary king, wikimedia commons almost 20 years ago, berkshire hathaway vicechairman charlie munger gave a talk called the psychology of human misjudgment at harvard. The psychology of human misjudgment v linkedin slideshare. Topics charlie munger, human misjudgment, buffet, economics, business, berkshire, wall street, psychology. During a talk at harvard in 1995 entitled the psychology of human misjudgment, munger mentions tupperware parties and open outcry auctions, where he explained three, four, five of these things work together and it turns human brains into mush, meaning that normal people will be highly likely to succumb to the multiple irrational tendencies.
Therefore, before presenting the logic and evidence in favor of the two behavioral theories, we examine these two neoclassical theories and explain why we do not believe that they can account for merger. Psychology of human misjudgment bias arises from the nonmathematical nature of the human brain in its natural state as it deals with probabilities employing crude heuristics, and is often misled. Charlie munger on 24 standard causes of human misjudgement. While the literature on merger waves shows that domestic mergers are procyclical, i nd that crossborder mergers are even more procyclical than domestic mergers. Bias 1 reward and punishment superresponse tendency bias 2 likingloving tendency bias 3 dislikinghating tendency bias 4 doubtavoidance tendency bias 5 inconsistencyavoidance tendency bias 6 curiosity tendency bias 7 kantian fairness tendency bias 8 envyjealousy tendency bias 9 reciprocation tendency bias 10 influencefrommere. How thinking like charlie munger may have saved my life 25iq. The psychology of human misjudgement andrew wilkinson. Human misjudgment and its financial costs michael j.
A were summarizing the text he authored titled the psychology of human misjudgement, where he describes some. Munger believes that if you combine doubtavoiding tendency with a desire to. Full text of speech the psychology of human misjudgement by charlie munger thank you for watching the youtube video on the psychology of human misjudgement, you will find the full text of the transcript for that video here. A great post on metafilter turned me on to twenty four standard causes of human misjudgement, a classic 1995 speech by charlie munger much cited, and transcribed here in pdf, in which munger. In this speech at harvard, know as the psychology of human misjudgment, charlie discusses his 24 rules for avoiding human misjudgement. These are notes of a lecture munger gave on the psychology of human misjudgement, in which he talks about how psychology impacts decisionmaking, especially in the context of finance. Charlie munger is the vice chairman of berkshire hathaway. What happens when these standard psychological tendencies combine. October 22, 2017 in order to reach our potential as human beings, we have to study our mistakes, including what causes or leads to those mistakes. Charlie munger gave a speech called the psychology of human misjudgment in which he explained how investors should use mental models to counter cognitive bias and other psychological shortcomings in the human brain.
I took notes on the talk because it was interesting and conducive to note taking being a list and all. The psychology of human misjudgment totally free for lifetime access. To fix artifacts, fonts and other extra html, i used plain old regex based find and replace on atom. A summary of the psychology of human misjudgment by. Charlie munger on the psychology of human misjudgment 25iq. Great insights from two legendary entrepreneurs thats what marc andreessen is offering up in a series of posts on charlie mungers the psychology of human misjudgment. Incentivecause bias, both in ones own mind and that of ones trusted advisor, where it creates what economists. How thinking like charlie munger may have saved my life february 9, 20. I listened to a talk yesterday by charlie munger, a bigshot at berkshire hathaway warren buffetts investment firm. Reviewing mungers the psychology of human misjudgment. The psychology of human misjudgement, 1995 talk by charlie.
He offers you a fixed bonus of rs 1 crore for the year. The psychology of human misjudgment 2005 pdf hacker news. Charlie munger on the psychology of human misjudgment. Get 100% free udemy discount coupon code udemy free promo code,you will be able to enroll this course behavioral finance. This is a transcript of the psychology of human misjudgment. The psychology of human misjudgement, 1995 talk by charlie munger march 2, 20 6. Twenty four standard causes of human misjudgement boing. For example, a religious cult might combine a drugmisinfluence tendency, a twaddle. The psychology of human misjudgment by charlie munger charlie munger.
Another powerful model says the models themselves can combine to have a. Audio of the often referred to speech by charlie munger on the psychology of human misjudgement given to an audience at harvard university circa jun 1995. Charlie munger is the author of this fantastic framework, this page highlights the video that features the first speech munger gave on this subject. Home financial wellness the psychology of human misjudgment.
He gave three talks that were combined into this talk at harvard university on 25 different biases that are the root of most poor. To fix artifacts, fonts and other extra html, i used plain old regex based find and replace on. We try to look at mental models in history through the lens of people who got it right, but once in a while, its beneficial to examine a model through the lens of those who got it wrong. Notes and marginalia on the power of mental models, written after reflection on charlie. While you may be able to recognize one or two of them when they are separate from each other, but imagine when you have five or six of. Please note that we secure rights for everything we summarize this may take a while. Vicarious liability raises an additional challenging twist with respect to the doctrine of merger since the parties are different but the underlying cause of action is the same. Merton, who shared the 1997 nobel memorial prize in economicsciences for a new method to determine the value of. Mungers magnum opus speech, included in the book, is the psychology of human misjudgment. Results also support the common expectation that organizational complexity is a. The pyschology of human misjudgment by tradd davidson issuu. Underrecognition of the power of what psychologists call reinforcement and economists call incentives.
Charlie mungers psychology of human misjudgment part 1 may 20, 2014 posted by stockkevin psychology of human misjudgment cause of irrational behaviors. When i read transcripts of my psychology talks given about fifteen years ago. This is part of a series in which well be summarizing the text he authored titled the psychology of human. I found a pdf version which, unlike the link above, was not a scanned copy. Charlie got a fair bit of inspiration from cialdinis book influence. The psychology of human misjudgment the simple dollar. The audio file below contains the often referred to speech by charlie munger on the psychology of human misjudgment given to an audience at harvard university back in 1995. Charlie mungers psychology of human misjudgment part 1. Munger is warren buffets longtime partner and vicechairman at berkshire hathaway. Charles munger, the vice president of berkshire hathaway, has written extensively on what he calls elementary wisdom, so much so that his remarks have been affectionately termed mungerisms. Merger waves coincide with booms in the real sector and in the nancial market. Charlie munger on human misjudgment the crosshairs. This article was first published in the merger control, edition 8 published in august 2017 editor ilene knable gotts for further information please email nick.
Its called the psychology of human misjudgement and its about the many ways that we fool ourselves into making horrible decisions in business, investing, and life. Charlie munger on the psychology of human misjudgment mill. Theres a more complete version of this in the book poor charlies almanack. While knowing these inherent biases is a concrete first step toward higher selfawareness, i. I have set up a bookmarks system in the pdf file to ease your. The psychology of human misjudgement charlie munger book. The psychology of human misjudgment, by charlie munger.
The psychology of human misjudgement charlie munger full. You are sitting at your work desk sipping your coffee when your boss comes and offers you the following deal. The 7 most common sources of financial misjudgment. Along with commentary and recommended resources on the psychology of human misjudgement. Charlie munger on the psychology of human misjudgment speech at harvard university estimated date. Those familiar with the work of daniel kahneman for example wont find too much new here, but nonetheless it is a good quick introduction to the topic. The standard causes of human misjudgment, according to charlie munger, are. We have provided both the original audio file as well as a pdf transcription created by t2 partners. Human misjudgment and its financial costs spring 2018 michael j. Posted on march 6, 20 may 24, 2016 by puneet khurana.
Myron scholes robert mertonmembers of ltcms board of directors included myron s. Broadly, the studies find and the theory puts forth that there is a higher consequence arising from preexisting structural characteristics, over those that are cultural. In his speech, charlie talks about some of the different kinds of. This is a continuation of my previous blog posts on the psychology of human misjudgment, which is charlie mungers description of dysfunctional decision making heuristics. The reason why people get it wrong is because they jump to conclusionsusing the re. The psychology of human misjudgment economists assume that people are rational in the sense that they use all available information as they take actions intended to achieve their goals. Charlie munger is warren buffetts right hand man at berkshire hathaway nyse.
But behavioral economists dont agree with the view of standard economics. Psychologists have identified cognitive biases we all have from evolution that regularly lead to mistakes. Warren buffets partner, charlie munger lectures on human misjudgment. Used a web based pdf to doc converter, fixed some formatting and converted the.1138 1293 31 1424 269 673 379 1214 965 715 658 1239 1492 909 518 872 1124 1281 103 634 131 594 47 1097 1485 1203 482 612 1468 555 354 860 489 680