Psychology of Human Misjudgment | Hacker News Reader

Psychology of Human Misjudgment

neilkakkar.com

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Charlie’s speech has been covered many times on HN. It’s worth reading the past comments.

https://hn.algolia.com/?query=misjudgement&sort=byPopularity...

I’ve listened to the speech on YouTube a couple of times.

Thanks, this is a good idea!

The speech on Youtube is a shorter version of this text. He revisited it and expanded on it in Poor Charlie's Almanac.

Here's the full extended text: http://web.archive.org/web/20151004200748/http://law.indiana...

I think this is very well structured and complete, given Charlie had a lot more time to figure this text out from the speech.

There seems to be maybe one missing and that is the disproportionate bias from reputation.

People can completely hate people they've never interacted with before just because of what they hear said about them.

Once I stayed at a hotel with this guy who had some mental illness, bigoted ideae, and who thought I was gay. There was a gay pride parade going on that day nearby. He completely lost it and was yelling and harassing me. Of course he ended up getting escored out, but what happened before that was possibly even worse.

When I went downstairs the staff wouldn't even talk to me because he had gone down there first and badmouthed me in advance. I was just lucky several people came down and acted as witnesses. I also had a cell phone recording, but it didn't even matter at the time because they wouldn't even give me the time of day.

If you think about it, it's crazy how easily people can be made to put you down.

"One standard antidote to foolish optimism is trained, habitual use of the simple probability math of Fermat and Pascal."

If somebody read the book, I'd like to understand what he means. Why does he think people are generally so optimistic, and what is the math he's referring to?

By my reading of Munger, it’s not necessarily that people in general are optimistic, but rather that foolish optimism is one of the flavors of human misjudgment. Ever the practical ‘psychologist’, I don’t believe Munger focuses on diagnosing the causes of the various forms of human misjudgments (beyond their categorization into these forms) so much as he does on prescribing their potential resolutions, or ‘antidotes’ as he says here.

The math he refers to is simply high school level probability math.

Warren Buffett has said the same thing.

All you need is high school mathematics and a sense of realism.

Fermat and Pascal refers to basic probability theory as in this stuff https://en.wikipedia.org/wiki/Problem_of_points#Pascal_and_F...

He's saying rather than putting everything on red because you are optimistic you should figure the odds of red are 18(18+18+2) and your expected return on a dollar is 95c.

Of course things like should I punt on a startup are more complicated than roulette but you can maybe benefit from looking at what proportion of similar ones succeed and that kind of thing I guess.

C3-PO: "Sir the probability of successfully navigating an asteroid field is approximately 3,720 to 1!"

Han Solo: "Never tell me the odds!"

--------

C3-Po has the habit Munger recommends. Han is probably an incorrigible optimist.

Worth a read https://www.countbayesie.com/blog/2015/2/18/hans-solo-and-ba...

Hey Gniv,

I was supposed to link to this post (got kinda lazy and wanted to get this summary out) - will do so once it's ready!

For those that are interested in going further, I've written on the biggest teaching/insights of Charlie Munger here: https://norswap.com/munger/

In particular, here is a review/summary of his full list of 25 psychological tendencies: https://norswap.com/munger-psychology/

He's still alive at 95, and still active in Berkshire Hathaway.

How when some one say they won’t change if they get rich. Remind them of this: Contrast-Misreaction Tendency

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