Summary of On the Psychology of Human Misjudgment

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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.

About the Author

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



In his 1995 address at Harvard University, Berkshire Hathaway vice chairman Charles Munger offers 24 observations based on his 70 years of life. The first four are:

1. “Under-recognition” of the power of incentives – Even people who recognize the importance of incentives routinely underestimate how big a role they play in behavior. An example is FedEx, where it’s imperative that workers sort all the packages quickly. Managers tried every kind of persuasion to make their workers speed up, but nothing worked until someone ...

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