- Anchoring bias — When we hear a number, we get attached to it
- Belief persistence - Not reconsidering faulty beliefs
- Confirmation bias - We tend to notice and agree with data the supports our opinions, while we tend to disregard data that challenges it. If you believe there are a lot of red cars on the road today, you’re more likely to notice the red cars you see.
- Egocentrism - When our group obtains a result, we attribute more credit or blame to ourselves than an outsider would.
- Hindsight bias - People think their forecasts were more accurate than they are. To combat this, record your predictions in advance and review them after the fact to see if they were accurate and what could be learned from the actual outcome
- Illusory correlation: We jump to conclusions about the relationship between two unrelated variables
- Primacy effect - Believing the data that we see first
- Recency effect — We think the future will be most similar to the most recent past
- Survivorship bias - TODO
- Become aware of then
- Review whether we’re vulnerable to certain of these
- Getting rapid feedback on decisions
- Tap into unbiased experts
Bad decisions are often not about a lack of intelligence. Could be cognitive biases
To change your habits, change your environment.
“If you want to change your habits, change your environment.” - Benjamin Hardy
To change your life, change your environment.
Humans are tribal. We are a byproduct of the people we surround ourselves with, the beliefs of our communities, the habits we have cultivated. It is far more difficult to swim upstream than downstream. If you want to get fit, move to a place full of fit people. It you want to get educated, surround yourself with educated people. If you want to become more positive, surround yourself with positive people. Studies have shown that fit people are statistically more likely to gain weight if their closest friends are obese. By changing your environment, you can change your habit–for better or worse.
Understand positive and negative cycles:
- Success breeds success.
- The rich get richer, and the poor get poorer.
Once you learn discipline, you can apply it to other areas of your life.
Start by understanding that correlation does not equal causation. Then understand that correlation has utility. In a healthy system, many things are improving. In an unhealthy system, many things are declining. By observing that many things are improving, it is generally accurate that other things are likely going well.
A healthy person tends to be improving on multiple dimensions (physically, emotionally, relationally, financially), meanwhile an unhealthy person tends to be declining on multiple dimensions: excessive drinking, weight gain, brain fog, joint aches, etc. While this doesn’t mean that drinking causes the weight gain or brain fog, it’s important to recognize that once many related variables indicate the system is unhealthy, it is very likely that other indicators are also unhealthy–or will soon be. Someone declining on multiple axis is a higher risk of decline on other axis due to the fact that there is high correlation between healthy and unhealthy behaviors and symptoms.
- Hurt people hurt people. Understand that their behavior tells you more about themselves than the other person.
Reward & Punishment Super-Response Tendency
Almost everyone underestimates the power of incentives and disincentives in changing cognition and behavior. Even when they think they don’t. - Munger, paraphrased
The captain should go down with the ship. Every captain. Every ship. - Nassim Taleb
Performance suffers if you pay someone in advance rather than after the fact. Most people don’t realize this.
Liking / Loving Tendency
- Admiration causes an intensified liking or love.
- Be wary of falling in love with a company.
- Be wary of having too much stock in your employer’s company.
- Some people take advantage of this by having friends sell to friends via Tupperware parties.
- Offset this risk by seeking out wise people who are not afraid to disagree with you.
“A year in which you do not change your mind on some big idea that is important to you is a wasted year.” - Charlie Munger
Disliking / Hating Tendency
The inverse of the previous.
- Be careful not to pass on qualified candidates because they attended your rival school.
- Be careful not to pass judgment on a company or person based on irrational associations
- Politicians and religious leaders have learned to manipulate people into making decisions using this tendency.
“It’s counterproductive for a prey animal that is threatened by a predator to take a long time in deciding what to do.” - Munger
This doubt avoidance tendency is why so many entrepreneurs start companies even though they know the odds of failing are so high. In aggregate, this benefits society but at a high personal cost to many entrepreneurs.
Inconsistency Avoidance Tendency
Starting each day with a fresh mind about everything requires too much processing power.
The desire to resist any change in a given conclusion or belief is particularly strong if a person has invested a lot of effort in reaching that conclusion or belief and/or if the change will result in something that is unpleasant.
This is why so many businesses are now obsolete which refused to recognize the threat of personal computers and mobile devices.
“Experience tends to confirm a long-held notion that being prepared, on a few occasions in a lifetime, to act promptly in scale, in doing some simple and logical thing, will often dramatically improve the financial results of that lifetime. A few major opportunitie, clearly recognizable as such, will usually come to one who continuously searches and waits, with a curious midn that loves diagnosis involving multiple variables. And then all that is required is a willingness to bet heavily when the odds are extremely favorable, using resources available as a result of prudence and patience in the past.” - Charlie Munger
Kantian Fairness Tendency
Modern man expects a lot of fairness.
“Some systems should be made deliberately unfair to individuals because they’ll be fairer on average for all of us.” - Munger
“Tolerating a little unfairness to some to get a greater fairness for all is a model I recommend to all of you.”