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On the Psychology of Human Misjudgment
Article

On the Psychology of Human Misjudgment


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Editorial Rating

8

Qualities

  • Innovative

Recommendation

When Charlie Munger, vice president of Berkshire Hathaway, addressed Harvard University in 1995, he deftly identified the biases and habits of thinking that cause people to make avoidable – and sometimes catastrophic – mistakes. He shares lessons that he learned over his 70 years – lessons which, in his own words, he “didn’t learn well enough early enough.” getAbstract recommends this summary of the first four items on Munger’s list to people interested in becoming more self-aware and making more rational decisions.

Take-Aways

  • Biases cloud human judgment. Awareness of these biases can improve your decision-making skills.
  • Incentives are powerful, but people routinely underestimate their importance.
  • People are prone to deny information that pains them.

About the Author

Charles T. Munger is the vice chairman of Berkshire Hathaway and author of Poor Charlie’s Almanac and On Success.


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