The Psychology of Human Misjudgement - Charlie Munger Full Speech 

Timestamp for 24 standard causes of human misjudgement: 1) 3:00 - Bias from reinforcement and incentive 2) 5:08 - Man with a hammer syndrome 3) 6:09 - Psychological denial (reality is too painful to bear, so you just distort it until it’s bearable) 4) 6:57 - Agency cost (too trusting of advisors who don't know more than you) 5) 10:18 - Bias from consistency and commitment tendency / Self-confirmation tendency (hard to change your mind once emotionally committed to an idea) 5.5) 11:28 - (Related to previous point) - Bias from cognitive dissonance (caused by echo chambers) 6) 12:31 - Bias from pavlovian association / past correlation for decision making 7) 19:49 - Bias from reciprocation tendency (ask for a lot and then back off to a lower offer) 8) 24:04 - Bias from over-influence of social proof 9) 26:48 - Bias from contrast (lowering/distorting your standards by comparing two options that are equally bad - or having a "grass greener on the other side" mentality by comparing to an unrealistically high standard) 10) 30:13 - Over-influenced by authority 11) 31:50 - Bias from deprival super reactions syndrome (sunk cost fallacy) 12) 35:00 - Bias caused by envy 13) 35:51 - Bias from chemical dependency (addictions) 14) 36:15 - Bias from mis-gambling compulsion (I made the choices so the odds must be better) *[numbering gets confusing at this point] But these are my personal breakpoints* 15) 38:36 - Bias from liking distortion (over-influence/mislead by someone we like - including ourselves) 16) 38:48 - Bias from disliking distortion (under-influence by someone we dislike - especially if they are right and we are wrong) 17) 42:19 - Bias from the non mathematical nature of the human brain (too stupid to understand maths and too lazy to learn) 18) 44:00 - Bias from fear of scarcity 18.5) 45:50 - Don't trust someone who says "I've never done it before and I'll never do it again" 19) 46:34 - Bias from sympathy 20) 49:48 - Bias from over-influence and extra evidence 21) 51:00 - Bias caused by mental confusion caused by information not arrayed in the mind to create sound generalizations (you memorized new information, but you haven't learned it or know how to make it useful. Test new information by answering "why") 22) 50:49 - Starts at 53:16 - Stressed induced mental changes (small/large, temporary/permanent) 23) 54:20 - Common mental illnesses and declines temporary and permanent and quitting the tendency to lose ability through disuse (Charlie skipped this explanation: says he doesn't have time for it) 24) 54:28 - Say-something syndrome (difficult to explain new concepts to others who lack "first principles") *Questions:* 1) 55:45 - What happens when these standard tendencies combine? 2) 1:01:01 - Isn't this list topological (meaning is there overlap and some item is a combination of other items) 3) 1:01:15 - Are these (biological) tendencies generally good or bad? 4) 1:07:31 - What special knowledge problems lie buried in the thought system indicated by the list 5) 1:09:00 - How should the best parts of psychology and economics interrelate in an enlightened economists minds *Extra* 11:56 - It's very important to not put your brain in chains too young by what you shout out (by joining echo chambers) 1:05:54 - Confirmation bias

This talk is like a great book that you don't grasp fully the first time, so you keep coming back again. And again and again....

Rest in Peace Mr. Munger

I’ve heard this over 10 times now. And it never stops parting wisdom on me each time.

This is one hell of a staring contest.

This sort of thing is the best use of RU-vid.

This talk is like gold dust for an investor. Listen to again and again and again .. and there is still more to learn from it!

I have probably listened to this like 50 times now.

I really appreciate the use of the word "sin" when talking about bad financial decisions. It's not just that you lose money as an investor and it's a shame that you made a bad decision, it's that you have squandered the life of the people you have employed. They may have been paid for the time they spent, but for their efforts have nonetheless gone to waste and that is a sin if you could have avoided it.

I currently listen to this at least once a week. Behavior Economics is a good subject to demonstrate how we lose money, and once you apply it's principles to your life, you can begin to see black and white rather than grey area.

“I wanted to get rich so I could be independent.” 1:14:00

Hello, the book he's referring to is by an author named Robert Cialdini, I have posted the link to his book "Influence: The Psychology of Persuasion" above in my video description just today.

This speech changed my life for the better. MR. MUNGER is one of the greatest minds of this century.

Coming back to this classic speech for a listen

I would recommend everyone to download this and save it on a server and multiple usb hard drives. This stuff is literally gold.

Buffett and Munger have spent so much time together that they sound amazingly alike.

his reaspea' stimulates us. his consistent pause is fantastic. his moment of thought is unreal. perfectionist.

Just started listening to Charles munger and Warren buffet. I feel munger really gets you to mould your mind and rewire yourself, he is so focused on the main point just for its truth and nothing else that you start to apply that to everything. He should be on the list of everyone's hero's.

Thank you for uploading this.

First time i heard this it was so overwhelming and i felt dumb as hell lol. Now after listening dozens of times and reading all of Charlie's books years later all of his principles have helped me become more successful and will continue to do so! The person who doesn't follow Charlie is missing out

To a man with a hammer every problem looks like a nail

I would expect this talk to have more "hits" This is among the best, if not the best talk I've ever heard.

You have to watch it a 1000 time . Every time I watch/listen to it . I learn something new. I will advise people to make notes while listening to this because what he is saying is really deep and complex . To make it your own model you have to think and contemplate on it .

Excellent... World has Misjudged in understanding greatness of Charlie Munger... he is still too underrated!

Thank you for posting this video, greatly appreciated!

Amazing knowledge, very eloquently presented, these are the kind of classes we should be having in school!

Dang the power of writing way of thinking out. This clarifies and illuminates a lot of the way you think around decision making. Genius

There is not a person in this world I admire more than Charlie Munger.

Thank you for uploading it. I love Munger. i listen to him while im working out.

My 4th time listening to this, im still learning and picking up things which i missed before, really is a wealth of information, guessing ill be back another few more times!

29:15 "I have this worthless friend that I like to play bridge with. He's a total intellectual amateur that lives on inherited money." 🤣

This will be the legacy of this great man. No one has even tried to match this speech. It’s 2020 now.

Probably my favorite video on the internet.

this is the content people should be listening to or at least giving a shit about. not pop music and sports talk about nothing. this is when we decipher who gets sucked into consumerism and who looks at the big picture and profits off the consumer. glad im among friends here.

I think what Munger is referring to here is the way psychology is conventionally taught in post secondary education. I think he's referring to the way in which each concept is taught in its own right and there has not been too much research into how they work on real life where they are intertwined with each other. When a combination of incentives work together, they result in different permutations in behaviour. There is more to gain from that than learning about each incentive separately.

This man is brilliant. You can never get enough from his wisdom.

Much thought is behind this talk.

Incredible talk with great examples. I just order a copy of the book.

Thanks for subtitles !!!

a young man in the crowd took this talk to heart. he grew up to be very successful. that man was warren buffett.

Poor Charlie's Alamanac Brought me here. Wow this man is a genius. This generations Ben Franklin

No wonder him and Warren built an Empire!

Thank you for posting

I don't know how many times I've listened to this GOLD.

Charlie Munger is my hero.

Thank you for the post

This talk is money in the bank after you listen to it a few times. But most won't. Love Buffett and Munger because there is not bias. They are not trying to sell you something.

I feel I've stumbled on to something profound. I'm stunned I've never heard of Charlie Munger.

A true intellect. A man after my own heart.

The Stanford Law School article mentioned at the end of Mr. Munger's lecture is called "On Teaching Professional Judgement" by Paul Brest and Linda Krieger; copies of the article were handed out following the lecture.

thank you for posting this video

Every sentence (epitome);he says just gives me more research material .

One of the best talks I heard about decision making, period. It’s funny to to hear it from Munger!

thank you for posting...

12:00 "It's very important to not put your brain in chains too young by what you shout out." - Charlie Munger

Just realized that the “wortheless friend” he plays bridge with he mentions at 29:10 is Warren Buffett 😂😂😂

Excellent. I need to hear this more than once.

This was wonderful knowledge and wisdom. Thanks for sharing 👍

Going to listen to this 2 more times.

Thank You Sir! all the best!

34:30 Turn on the captions.

What is the book Charlie munger is talking about during bias# 7? It sounds like "Seal Aldiny", but I can't find anything on that.

The reason I was drawn to this was to get some insight into my trading emotions.If you take it into perspective it has valid points I can relate to such as the lalapalooza effect!

I love listening to what people think.

All in all, this was a phenomenal speech by Charlie Munger.

Something interesting that I read today was "the betrayal of Technology" by Jacques Ellul. He thinks that technology encourages "reflex thinking" over "reflection" Perhaps, Skinner lacked a framework to support his intellect. Thus took a more absolute approach to decision making rather than a relative one. With the broadness of circumstances which normally form the pretext of each case, I could see him as a man with a hammer too

Great talk!

Interesting like the part on envy and jealousy .Will review this video again.

Started watching this when it had 50k views - watched it 50 times also, still hearing new things each time. Gangamstyle music video had cracked 1 billion views when this was at 50k views. The 1.2m is probably just 20k people watching to over and over. ;;)

Think about how funny it is that many people spend 20 hours a week watching tv/netflix, and how much wiser they could have got by using that time for ONE week to listen to this 15-16 times. The hilarious part: practically none of them will ever do anything like it, and would consider the thought ridiculous. Oh well. I guess I'm frustrated and happy about it. Kind of sad, but less competition and it wouldn't be as valuable if everyone agreed.

Enlightening and Scary talk both at the same time. Scary in that you never hear this psychological context related to public persuasion, or you rarely do. Thanks to technology we are truly living in the golden age of bullshit and this type of information is like the silver bullet one needs to protect themselves and their loved ones..... Thanks for posting !

Pure brilliance.

Funny a friend of mine recommended a book last month that I picked up on amazon and I love it! I stumbled onto this video and its the book he is talking about!! The book is called Influence

Wow!! Charlie is psychology expert indeed

almost 30 years and his voice hasn't changed much.

This is an example of what needs to be taught in schools from an early age.

I actually like this version better than the revised one in his almanack. I think it's more genuine and witty.

what is the title of the book given away regarding reciprocation theory?

thank you for the video it feel like reading a good book

This is the kind of material you want in your mind to materialize in ones life

This is gold

Ditto. Thanks for posting. This is great stuff from one of the sharpest minds in the country.

What is the book he's referring to about reciprocation?

At 42:19 "Non-mathematical nature of the human brain" (Availability Bias), Munger says "The right way to think is the way Zach Houser plays Bridge..." Who is Zach Houser and how does he play Bridge? I can't seem to find any direct info on this via Google (perhaps I'm spelling his name wrong.)

For those looking for closed captions, the full transcript can be found on this great website. fs.blog/great-talks/psychology-human-misjudgment/ I highly recommend the website/blog and the podcast.

ty for sharing

Can anyone recommend any books by Mr. Munger? Investor fundamentals or investor psychology?

Pure gold - thanks!

I thoroughly enjoyed this.

What is the book he's referring to at 20:00? Does anyone know?

Bubbles gives a great lecture on the psychology of human misjudgement

EXTREMELY PROFOUNDD!!!!!

This video has changed mylife

From Venezuela. Charlie Munger and Warren Buffet are the teachers of the wisdom. They are my idols

I admire and love this speech surely and this is a definitely good starting point. But I believe the perfect ending point is Nash equilibrium or something having been addressed in game theory..

thanks for always being a great influence sir, I really appreciate you mentor sessions hope you getting more wonderful things in life sir.

What was the book he recommended? I couldn't hear. Was it the Rober Cialdini book that's in the description?

Are there any videos of him speaking about the same topic but without thee staring contest?

There's an incredibly annoying resonant frequency in this recording.. Great talk though!

This is GOLD!