Incentives and Combined Biases: Munger's Framework for Clearer Judgment

Resources

Books

• "Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger" - This book contains Charlie Munger's speech "The Psychology of Human Misjudgment" and is a comprehensive resource for understanding his thought process.

Research & Studies

• The Psychology of Human Misjudgment by Charlie Munger - This is the foundational speech and framework for the episode, identifying 24, later 25, psychological tendencies that cause systematic errors in thinking.

People Mentioned

• Charlie Munger - The subject of the episode, known for his partnership with Warren Buffett and his insights into human psychology and decision-making.
• Warren Buffett - Partner of Charlie Munger, referenced for his track record in investing and his insights into human behavior.
• Fred Smith - Founder of Federal Express, mentioned as an example of how incentives can drive business success.
• Upton Sinclair - American novelist, quoted for his observation on how self-interest can impede understanding.
• Peter Bevelin - Referenced for his writings on psychology and decision-making, particularly regarding the desire to be liked.
• Daniel Kahneman - Nobel laureate, mentioned for his insights into decision-making and the tendency to avoid doubt by reaching conclusions.
• Charles Darwin - Naturalist, cited for his practice of actively seeking evidence that disconfirmed his hypotheses.
• Max Planck - Nobel laureate in physics, noted for his observation that scientific truths often prevail due to the death of opponents rather than conviction.
• Albert Einstein - Physicist, mentioned as an example of someone who could fall victim to early conclusions, resisting the implications of quantum mechanics later in his career.
• Aristotle - Philosopher, quoted for his definition of envy.
• Charles Kindleberger - Financial historian, cited for his observation on the disturbing nature of seeing a friend become rich.
• Peter Kaufman - Friend of the host, used to illustrate the principle of reciprocation with an elevator example.
• Bono - Singer, quoted on the necessity of vulnerability to connect with others.
• Robert Cialdini - Psychologist, known for his research on persuasion and influence, particularly the principle of reciprocity.
• Sam Walton - Founder of Walmart, mentioned for his policy of preventing purchasing agents from accepting favors from vendors.
• Carl von Clausewitz - Prussian general and military theorist, although not explicitly named, his concept of "fog of war" is related to stress influence.
• B.F. Skinner - Psychologist, known for his work on operant conditioning, referenced in the context of a honeybee experiment.
• Richard Feynman - Physicist and Nobel laureate, quoted with the principle that one must not fool oneself.

Organizations & Institutions

• Federal Express - Used as a case study for the power of incentives.
• Harvard Law School - Mentioned as the institution that refused to teach Munger psychology, prompting him to self-teach.
• FS Blog - The website where the full updated version of Munger's speech is published with his permission.
• Sephora - Mentioned in a promotional segment regarding gift sets.
• Walmart - Mentioned in a promotional segment regarding gift brands.
• FINRA - Mentioned as a resource for investors to learn more about making informed investment decisions.
• Berkshire Hathaway - Munger and Buffett's company, mentioned for its practice of prioritizing bad news.
• USC School of Music - Mentioned in an anecdote about excessive self-regard and honesty.
• Caltech - Mentioned for its engineering professor's view on academic administration.
• Cults - Used as an example of how multiple psychological tendencies can be combined to influence individuals.
• Alcoholics Anonymous - Mentioned for its approach to treating addiction and its success rate.

Websites & Online Resources

• FS Blog (URL not explicitly mentioned) - The website where the full updated version of Munger's speech "The Psychology of Human Misjudgment" is published.
• FINRA.org (URL explicitly mentioned) - A resource for investors to learn more about making informed investment decisions.

Other Resources

• Milgram Experiment - A famous experiment demonstrating obedience to authority, used as an example of the Lollapalooza tendency.
• New Coke - A product failure used as an example of the Lollapalooza tendency in the opposite direction of success.
• McDonald Douglas evacuation tests - Used as an example of how multiple psychological tendencies can lead to disastrous outcomes.