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Why do smart people make bad decisions? Charlie Munger discovered 25 tendencies sabotaging your judgment right now. Here they are: 1. Reward and Punishment Superresponse Tendency 2. Liking/Loving Tendency 3. Disliking/Hating Tendency 4. Doubt-Avoidance Tendency 5. Inconsistency-Avoidance Tendency 6. Curiosity Tendency 7. Kantian Fairness Tendency 8. Envy/Jealousy Tendency 9....

676,237 просмотров • 10 месяцев назад •via X (Twitter)

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Today, the world lost Gene Hackman, who will be remembered for many legacies. But by behavioral economists, he will be best remembered for explaining mental accounting in this clip with Dustin Hoffman. What is mental accounting? It's our tendency to treat resources like money and time as if they aren't fungible. We create artificial "mental accounts" to help us keep track of resources and avoid overspending. In this clip, we learn that as a poor young actor, Dustin Hoffman kept jars of money with different labels (rent, entertainment, food, etc.) in his house and wouldn't take money out of a jar with one label to pay for expenses in another category. So when he ran out of food money, he went to Gene Hackman for a loan. Hackman was skeptical, however, when he saw that there was plenty of money in other jars! Huge thanks to Richard H Thaler for sharing this clip with behavioral economists everywhere. Many of us show this when we teach our students about mental accounting, which has implications for everything from taxi/Uber/Lyft drivers' tendency to set income targets to the way we respond when we're surprised with a $10 off coupon to the grocery store. I showed it to my The Wharton School MBA students just last week! Here are a few papers of my favorite papers on mental accounting: (1) Mental Accounting Matters: (2) Labor Supply of New York City Cabdrivers: (3) Mental Accounting and Small Windfalls: Video Source:

Katy Milkman

35,211 просмотров • 1 год назад

Did this obvious Patriots passing tendency help Seattle wreck their offense in the Super Bowl? In 2025, when New England used 11 personnel WITHOUT Mack Hollins on the field, in games he played, they passed on 54 of 56 snaps in normal early down situations. 96.4% Pass. One missing receiver practically told you what was coming. That situation came up six times in the Super Bowl. The first four results: 1st and 10: Sack. 2nd and 13: Quick pressure, dumped into the flat for a loss of two. 2nd and 7: Sack. 1st and 10: Sack. All four possessions ended in punts. None produced another first down after those plays. Watch the clips. Despite these being early downs, Seattle showed virtually no respect for the run. They attacked with aggressive rushes and pressures. I can’t prove Seattle identified this specific tell. But this is exactly the kind of edge Mike Macdonald hunts. I will place the odds he knew at 99%. Multiple people have told me about what he calls the “KGB,” an operation for searching for opponent tendencies and checking his own team for tells. I think Macdonald is a generational defensive play caller. And this operation contributes to that. I’ve run my own “KGB” operation for teams I’ve worked for. We were not a remotely good football team with the Raiders last year, but we used several incredibly strong Josh McDaniels and Patriots tendencies to help beat them in Foxborough in Week 1. Looking back at how the season unfolded, that might have been the biggest upset of the year. Beyond this personnel tell, McDaniels has a number of extremely heavy passing tendencies from shotgun that we were able to take advantage of. There are other glaring tells that I may share at a later date. These details matter. One WR's absence. A 96.4% passing tendency. Three sacks and another loss on six snaps on football’s biggest stage.

Ryan Paganetti

915,215 просмотров • 17 дней назад

Charlie Munger spent 50 years studying why intelligent people make catastrophically stupid decisions. It is the most useful thing I have ever watched: 1. Incentives are more powerful than anyone thinks. Munger says he has been in the top 5% of his age cohort his entire life in understanding the power of incentives and he has still underestimated it every single year. Federal Express could not get their night shift to work efficiently until someone realized they were paying by the hour. They switched to paying by the shift. The problem disappeared immediately. 2. People rationalise terrible behavior when their incentives point that way, and they do not even know they are doing it. A doctor in Nebraska was removing perfectly healthy gallbladders for years. When Munger asked an old colleague whether the doctor knew he was harming patients, the answer was no. he genuinely believed the gallbladder was the source of all medical evil and that removing it was an act of love. That is incentive-caused bias at its most extreme. 3. Psychological denial is real, and it is not just for weak people. A family friend's son flew off a carrier in the North Atlantic and never came back. His mother, a completely sane woman, simply never believed he was dead. Reality was too painful, so she distorted it until it was bearable. Munger says we all do this to some extent, and it causes terrible problems. 4. Consistency and commitment tendency are one of the most powerful forces in the human mind. Once you have stated a position publicly, you are psychologically locked into it. Max Planck said the really important new physics was never accepted by the old guard. A new guard came along that was less brain blocked by its previous conclusions. If this happened to the deans of physics, Munger says, imagine what it does to ordinary people. 5. The Chinese brainwashing system used on prisoners of war worked better than torture. They did not start with big demands. They maneuvered people into making tiny little commitments and declarations and slowly built from there. The same mechanism operates in every cult, every sales system, and every ideology that gets deeply embedded in people's heads. 6. Pavlovian association shapes buying behavior at a level most people never consciously process. Munger estimates three quarters of all advertising works on pure Pavlov. Coca-Cola does not want to be associated with funerals. They want to be associated with the Olympics, wonderful music, heroics. The association itself changes how people feel about the product at a subconscious level. Raising the price of a product can actually increase its market share because price and quality are associated in the human mind, and people use price as a signal of value. 7. Persian messenger syndrome is alive and running every major organization. The Persians killed the messenger who brought bad news. Bill Paley in his last 20 years, did not hear one thing he did not want to hear. everyone around him knew bringing bad news was dangerous. The result was that one of the most powerful men in media made terrible decisions for two decades because reality never reached him. 8. Social proof causes otherwise intelligent people to follow each other off cliffs. When one oil company bought a fertilizer company in the 1970s, practically every other major oil company rushed out and did the same. There was no rational reason for oil companies to own fertilizer companies. But if Exxon was doing it, it was good enough for Mobil. Every single acquisition was a disaster. 9. The efficient market theory persisted in academia for decades despite Berkshire Hathaway existing as a living contradiction. One economist kept adding sigmas to explain away the anomaly. two sigma, then three, then four, eventually six sigma. Munger's observation: It is better to add a sigma than change a theory just because the evidence comes in differently. That economist later went into money management himself and sank like a stone. 10. Contrast bias warps perception constantly and invisibly. Put your hand in hot water, then room temperature water. It feels cold. Put your hand in cold water, then room temperature water. It feels hot. same bucket. The human sensory apparatus has no absolute scale, only a contrast scale. Real estate agents exploit this deliberately. They show you two overpriced, awful houses first, then take you to a merely overpriced house, and it feels like a bargain. 11. The frog in slowly heating water is the business version of contrast bias. If something bad comes to you in small pieces, you are likely to miss it entirely. Munger says he has known many high-powered brilliant businessmen who were destroyed this way. not because they were stupid but because each incremental change was too small to trigger alarm. The contrast was never large enough to notice. 12. Authority bias is so powerful it can make trained professionals watch a plane crash. In flight simulator experiments, when the pilot, the authority figure, does something that any trained co-pilot knows will crash the plane, 25% of the time, the co-pilot sits there and lets it crash anyway. They have been trained to know better. The authority relationship overrides the training. 13. Deprivation super reaction syndrome explains why people go insane over small losses. Munger's neighbor had a 180 degree view of the harbor. the neighbor put in a pine tree about 3 feet high that turned it into a 179 and three-quarter degree view. They had a blood feud that went on for years. The New Coke disaster is the corporate version. Coca-Cola told customers they were changing a flavor and triggered a deprival super reaction so powerful that Pepsi was weeks away from releasing old Coke in a Pepsi bottle. smart engineers. brilliant lawyers. armies of psychologists. All missed it. 14. Envy and jealousy are far more powerful than greed and almost entirely absent from psychology textbooks. Munger says Warren Buffett has said half a dozen times that it is not greed that drives the world but envy. In a thousand-page psychology textbook, the index entry for envy and jealousy is blank. One of the most powerful forces in human behavior and academia essentially ignores it. 15. Gambling addiction is not explained by variable reinforcement alone. Skinner thought he had fully explained gambling by showing that variable reward schedules pound in behavior more powerfully than fixed ones. But the people who design modern slot machines know things Skinner did not. Lotteries where you pick your own number get far more play than lotteries where the number is assigned to you. People who commit to a number believe it has more validity because they chose it. Near misses on slot machines trigger deprival super reaction syndrome. It is four or five psychological tendencies working together, not one. 16. The most dangerous situations are when multiple psychological tendencies combine toward the same end at once. Munger calls this the lollapalooza effect. Tupperware parties use four or five tendencies simultaneously. Moonie conversion methods combine multiple tendencies and work extraordinarily well. alcoholics anonymous achieves a 50% no drinking rate when everything else fails because it also combines multiple tendencies toward a constructive end. The Milgram experiment is not just about obedience. it involves authority bias, consistency and commitment tendency, and contrast effects all working together. That combination turns human brains into mush. 17. Boards of directors are structurally designed to fail as corrective mechanisms. The top executive is the authority figure. He is doing something questionable. You look around, and nobody else is objecting, which is social proof that it is fine. He flies you around in the corporate jet and raises your director fees every year, which triggers reciprocation tendency. Munger's rule: boards only act when the behavior gets so bad it starts making them look foolish or threatens legal liability. That is the only forcing function that reliably works. 18. John Goodfriend of Salomon Brothers destroyed his career and reputation because he did not fire a trusted employee who had lied to the government. Every psychological tendency pointed toward keeping the man. He was a close colleague. His wife was known. He was part of a group that had made over a billion dollars for the firm. He said he had never done it before and would never do it again. Goodfriend looked into his eyes and believed him. The man did it again. The lesson: everyone who gets caught embezzling says they have never done it before and will never do it again. That is what they all say. 19. Darwin avoided confirmation bias by deliberately seeking out disconfirming evidence. Munger says Darwin was not especially smart by ordinary standards of human acuity. Yet he is buried in Westminster Abbey. Munger studied how Darwin worked and realized he had psychological tricks worth learning. Darwin always paid extra attention to evidence that contradicted his theories. Munger started doing the same and credits it as one of the most important intellectual habits of his life. 20. Why is the most important word in communication? Carl Braun designed oil refineries with spectacular skill, and you got fired in his company if you wrote a communication without explaining why. not just who, what, where, and when, but why. Braun knew that in a complex system where things can blow up, a communication system that always explains the reason behind an instruction works dramatically better than one that does not. Forstein, the general counsel of Salomon, told Goodfriend on multiple occasions that he had to report the employee's misconduct. He explained it was the right thing to do. He never explained what would happen to Goodfriend personally if he did not. he failed to use the most powerful tool of persuasion. Goodfriend ignored him. When Goodfriend went down, Forstein went with him.

Jaynit

780,567 просмотров • 3 месяцев назад

Since the first cell of life had a tendency towards self-preservation, life as a whole, including human life, inherited this trait. However, over time, people realized that strict biological rules were insufficient for self-preservation, and they began to incorporate softer, more humane means. They further recognized that it's not just about mere survival, but about living a dignified and meaningful existence. Yes, we understand this well today, but we are moving too slowly in this direction. We must deeply realize that we are now at a different level of life's complexity, and without a humane and exalted way of life, we will not achieve not only a meaningful and prosperous life but even simple self-preservation. : The author traces life’s self-preservation instinct from its first cell to humanity, noting that people recognized biological rules alone were insufficient, embracing humane means for survival. They realized life demands dignity and meaning beyond mere existence. Though understood today, progress toward this ideal is slow. Humanity’s advanced complexity requires a humane, exalted lifestyle to achieve not only meaningful prosperity but also basic self-preservation. This perspective highlights the urgency of elevating existence through compassion and purpose. It warns that neglecting this risks both fulfillment and survival. The call is for a profound commitment to a dignified life, aligning with life’s evolved intricacy to ensure a thriving future.

Zafar Mirzo | Quotes

653,827 просмотров • 1 год назад

The best founders in the world like Elon Musk or tobi lutke “go ultra-hardcore on deletion and simplification.” Luca Ferrari says Bending Spoons employs this idea of “Relentless Simplification” across their businesses: “Humans have a tendency to add complexity and do things that destroy value.” “If you leave an organization, almost any environment unattended, and you don't provide guidance in this regard, it will tend to become more complicated. People will add parts. It could be expanding a team or adding a step to a process, or adding an entire new process. If it's a product, adding a feature to the product. New rules. It applies to almost any human endeavor.” “People tend to add pieces, they very rarely remove pieces.” “If you don't make a conscious effort to achieve simplicity, and avoid this increasing value-destroying complexity, that's how we got to our modern society with all the bureaucracy and complicated regulation.” “We have this principle whereby we ask everyone who works here, every time someone is suggesting that we should be adding complexity, the burden of proof is on those making that suggestion. The people who support the thesis that we shouldn't be adding complexity don't need to prove it. They just have to raise a flag and say, ‘I don't think we should.’ The burden of proof is on those who want to add complexity.” “The other part of relentless simplification is that we want people to be on the lookout for existing complexity and suggest that we should remove it.”

David Senra

307,963 просмотров • 13 дней назад

Seth Klarman, founder of Baupost Group, on why the human urge to chase get-rich-quick dreams is exactly what creates opportunities for patient investors: Klarman argues that the real edge in investing comes from understanding a basic flaw in human wiring. "What creates opportunities is the fact that most investors and most human beings are constitutionally oriented to buying lottery tickets." When capital rushes toward speculative bets, it has to come from somewhere. And that's where the opportunity hides: "They love to buy the dream. And when money is going into the dream, it's leaving other areas. And it is that tendency of human beings to pursue those kinds of get-rich-quick opportunities that creates the value opportunities for the plotting, careful investors." The crowd's obsession with the next big thing is exactly what leaves stable, cash-flowing assets mispriced for those willing to look the other way. But capturing that edge isn't glamorous. Klarman describes it as a slow, deliberate process: "It's painstaking. It's careful. You don't buy your stocks all at once. You buy them over time because you recognise the market fluctuates." And critically, you have to be psychologically prepared for prices to move against you before they move in your favour: "You start with a good price and to your shock and surprise the stock actually falls and you got to be ready to buy more in a slow, steady, confident way."

Big Brain Business

10,123 просмотров • 4 месяцев назад

Hakainde's neo-colonial administration involved in corruption. Mundubile explains in the video below... Every Zambian citizen should pay attention to this sensitisation aimed at broadening the definition of corruption. Hakainde Hichilema's policies consistently prioritise private capital over public interest. Mundubile provides an example of $2.5 billion stolen by a mining company but removed out of court and forgiven by Hichilema's administration, as he pursues those Zambians owning flats and cars - and goes to the international community with a bowl in hand to beg for $1.3 billion. It is likely these people look at us as terrible fools, no wonder a black man including themselves with money is never respected by anyone including their friends, white capital, they know they are sellouts! They give us a bad name these misleaders. Another incidence was when Hichilema's neo-colonial administration instructed ZRA to forgive $1 billion and only allow instead $25 million paid in taxes. Instead of addressing these issues, they focus on pursuing individuals with flats and cars. Mundubile talks about foreigners borrowing money from Zambia to construct our roads and then collecting repayments from us over 25 years - he calls it an insult to our collective intelligence. Mundubile points out Hichilema's administration's tendency to bypass parliamentary procedures to favour private capital, disregarding the law. Undoubtedly, Hakainde's administration demonstrates a neo-colonial approach by favouring private foreign capital "preferably white" at the expense of Zambia's public interest.

Chonya

15,744 просмотров • 2 лет назад

Graham Hancock argues that psychedelics and shamanism are the hidden foundation of every civilization and that Ayahuasca delivers a raw moral reckoning most people aren’t ready for. “All civilizations, including ours, although we may deny it, all of them emerged from shamanism. Shamanism is the essence of the human adventure.” “Psychedelics are the most efficient way to enter the altered state of consciousness.” “Ayahuasca is a very clever technology. The Ayahuasca brew contains DMT… The Ayahuasca vine contains a chemical that shuts that enzyme down and allows the DMT to be absorbed orally producing an experience that can last for hours.” “With experienced use of Ayahuasca, one of the very common reports is this moral dimension that you are presented with your own life… with the pain that you may have caused to others. And suddenly that pain that you caused to another person… You suddenly get it from their point of view. You feel the agony that your words caused that person.” “You suddenly see what you are. You can’t go back into your own past and change negative and useless and pointless things that you did… but you can avoid repeating them in the future.” “It’s helped me to come to terms with my tendency to swift anger… I’ve become gentler and softer. Not gentle enough, maybe. It’s a journey. It’s not an overnight transformation. Not a magic pill.” “The main work with Ayahuasca comes after the medicine. The main work comes with what you do with the experience, how you integrate it into your life.”

Defiant Ghost

22,845 просмотров • 3 месяцев назад

At a show on his Solo Tour, John Mayer confessed: “I wait for most things to be over. I wait for this to be over to do the next thing and the next thing and the next thing and the next thing...” To counter this tendency, he implemented a rule. “Because I’ve realized, he said, “Everything you love and hate leaves at the same speed: Done. Done. Done. The thing you hate that you have to do tomorrow will be over before you know it, and the thing you're looking forward to tomorrow will be over before you know it.” “So I have a new rule in my life,” Mayer said, “and the rule is: Never wish for less time. Waiting for things to be over is just wishing for less time. Waiting for this to be over to get to the next thing—that's just wishing for less time.” “So wherever you go, just make a home right there and do that thing…Wherever you are, go, 'this is where it's all at right now.' I’ve been having the time of my life because I figured that out…” Takeaway 1: John's realization—that “everything you love and hate leaves at the same speed”—made me think of something that Dr. Anna Lembke writes about in her book Dopamine Nation: “One of the most remarkable neuroscientific findings in the past century is that the brain processes pleasure and pain in the same place. Further, pleasure and pain work like opposite sides of a balance.” “And one of the overriding rules governing this balance,” she said, “is that it wants to stay level…With any deviation from neutrality, the brain will work very hard to restore a level balance—what scientists call ‘homeostasis.’ … With any stimulus to one side, there will be a tip of an equal and opposite amount to the other side.” Pain and pleasure, good days and bad days, the things you're dreading and the things you're looking forward to—everything leaves at the same speed. Takeaway 2: The brain’s tendency to think about the next thing is called “prospection.” “Our brains were made for nexting,” the psychologist Daniel Gilbert writes in a chapter titled “Prospection” in his book Stumbling On Happiness. “When researchers count the items that float along in the average person’s stream of consciousness, they find that about 12 percent of our daily thoughts are about the future.” In other words, the average person spends 1 out of every 8 hours thinking about the next thing, “which is to say…each of us is a part-time resident of tomorrow.” We are constantly nexting, Gilbert explains, because of “the illusion of foresight”—the illusion that “prospection can provide pleasure and prevent pain.” The reality is that “the future is fundamentally different than it appears through the prospectiscope.” The reality is that (whether through the prospectiscope or in the present) everything—pain and pleasure, the things you're dreading and the things you're looking forward to—leaves at the same speed. - - - “So wherever you go, just make a home right there and do that thing…Wherever you are, go, 'this is where it's all at right now.' ... I’ve been having the time of my life because I figured that out...” — John Mayer Follow Billy Oppenheimer for more content like this!

Billy Oppenheimer

3,007,085 просмотров • 2 лет назад

Hypocrisy: Influential global leaders flock to WEF by private jet 'These are the people telling you to reduce your carbon footprint,' said Ezra Levant. The Rebel News team is on the ground in Davos, Switzerland as this year's World Economic Forum (WEF) officially gets underway. Rebel News CEO Ezra Levant 🍁🚛 travelled to a nearby private airport to highlight WEF attendees' tendency to not always practice what they preach. While the influential global leaders tell the masses to do everything they can to reduce their carbon footprints, the wealthy and powerful continue to travel by private jet. Speaking about some of the VVIPs attending the event, Levant said, "Let me tell you, they don't bother with going on to turn-ey, car-sick Swiss Alps roads, they fly private jets to this private airstrip about an hour and 15 minutes away from Davos." "And then many of them take a helicopter from here for that last leg of the journey. God forbid they share the highway with the peasants." Levant added, "They'll dine on the finest Wagyu steaks and Kobe beef while telling you to 'eat ze bugs.'" Discussing a conversation he had with a staff member at the private airport, Levant said, "One of the airport staff came up to me and just chatted with me and said that during the WEF week they get 150 flights a day of private jets through this airport alone." For all of our on-the-ground reporting from Davos and to support our independent journalism, check in daily at

Rebel News

174,304 просмотров • 2 лет назад