Human Tendencies - Lessons from Charles Munger

Charles Munger

Charles Munger, Vice Chairman of Berkshire Hathaway is a great believer in the understanding of human psychology and resulting behaviors. We begin our discussion with the four most powerful human tendencies:
Reward/Punishment Super Response: Incentives & Incentive-based biases create dominant behavioral forces. When trouble-shooting, first check the structure of the incentives.
Cascade Effect: An extremely powerful consequence from confluence of several psychological tendencies acting strongly in favor of a particular outcome.
Reason-Respecting: Advanced mental skills are widely revered by the vast majority of people. Wisdom is perceived as a precious commodity.
Contrast-Misreaction: Cognition/recognition responses can be incorrect due to slow changes involving low contrasts or by rapid and stark changes.

Human Tendencies - Lessons from Charles Munger