Our basic nature is based on a hunter gatherer style living. Biologically, we’ve spent 99% of our existence as a species in a Hunter Gatherer state, and we have not evolved enough to adapt to not being in one yet. Many of our tendencies can be explained by this history.
We’re drawn to novelty because the unknown is potentially rewarding. We might gain some benefit from exploring it, so we’re drawn to it.
The Pilot’s Checklist to Avoid Fooling Ourselves
- Prejudice from Simple Association
- minimising the influence of rewards and penalties
- underestimating self-interested bias
- Overoptimism and self-serving bias
- wishing, self-deception, and denial
- bias based on the consistency trend
- Consequences from the endowment effect and deprival syndrome
- Continuity bias and the inaction syndrome
- Impatience
- Bias from Jealousy and Envy
- evaluating through comparison as opposed to absolute worth
- Anchoring and adjustment-related bias
- Recency/availability bias
- Abstraction or omission, dogs that don’t bark
- bias due to the tendency to reciprocate
- bias caused by the tendency to like things too much
- bias resulting from the use of social proof
- bias resulting from the impact of power
- creating explanations that make sense of results
- Respecting the reason and following through since one has been provided
- Believing at first and then doubting later Memory issues, suggestion influence
- bias to simply do action
- mental perplexity brought on by the urge to speak
- emotional excitement that causes mental confusion
- Stress-related mental confusion Pain-related mental confusion, depending on the situation
Read These
Upton Sinclair: “It is difficult to get a man to understand something when his salary depends on him not understanding it”
Buffet: Never trust financial projections
Munger: Recognize your limits, how much you don’t know. Don’t try to be the smartest, just the least dumb.
Feynman: “The first principle is that you must no fool yourself, and ou are the easiest person to fool”
We tend to make fast judgments and then doubt ourselves when we start to think the answer might be different, we don’t like being wrong.
Seneca: “There is nothing wrong with changing a plan when the situation has changed.”
If you aren’t sure if you want to do something in the future, ask yourself if you would want to do it tomorrow.
Huxley: “Facts do not cease to exist because they are ignored.”
Buffet: “You don’t have to make it back the way you lost it, in fact, that’s usually a mistake.”
Know your goals and opinions, do you want this for emotional or rational reasons?
The Noah Principle: Predicting rain doesn’t count, building arks does.
People would rather be wrong in a group than be right by themselves.
If everyone is on agreement on a decision, it’s better to postpone until someone can come up with a good argument against it.
You’re neither right nor wrong because the crowd disagrees, you’re right or wrong based on your data and reasoning.
Experts can be more convincing when we don’t understand them, we assume that means that they’re smarter.
The 7 Sins of Memory
- Throughout time, our memory becomes less effective and worsens.
- Because of distractions, we are unable to concentrate on what needs to be remembered.
- We desperately look for knowledge that we already possess.
- We allocate RAM to the incorrect sources.
- When recovering information, memories are implanted through leading queries, remarks, or suggestions.
- Our current understanding affects how we recall the past.
- We remember upsetting things that we would prefer to forget completely.
Three Pieces of Advice on Not Being Dumb from Munger
You can learn to make fewer errors, correct them more quickly, and improve how you handle them. Sometimes you have to let go of someone you love dearly in your palm.
Double-track analysis What influences the parties’ interests, what unconscious forces cause the brain to act instinctively, and what other circumstances could lead to psychological errors?
Use the major psychological models as a checklist while evaluating the results. Also, you must pay close attention to the impacts of combinatorial lollapalooza.
The Mathematics and Physics of Errors
To stop concentrating on individual components and start thinking about how our actions affect the entire system is one strategy to lessen unexpected consequences.
What important variables affect the system’s output, and how do they interact? What other factors might alter as a result of a certain action?
Over-optimizing one factor could make the system as a whole perform worse.
Don’t react to symptoms, and never confuse an effect for its cause.
Put more protection wherever else and pay attention to where the bullet holes are.
“Not everything that can be tallied counts, and not everything that can be counted,” said Albert Einstein.
We frequently ignore or pay little attention to moments when nothing happens.
Rules for Improved Thought
Chemistry phenomenon known as “autocatalysis” in which once something starts, it continues on its own and picks increasing speed. This can’t last forever, but it’s a good model for figuring out how doing A can temporarily also bring you B and C.
Further useful models include physics’ Critical Mass, Breakpoints, and Backup Systems from engineering.
Have a complete set of resources available. Go through them in your head like a checklist. In order to make the best decisions, you must base them on fundamental truths.
There are functional similarities between fields as well. For example, the idea of stickiness in economics and viscocity in chemistry are highly comparable.
Make “one sentence summaries” for important concepts. We are rewarded for what we do. “Energy is merely transformed from one form to another; it is neither created nor destroyed.”
Just asking “why” while we observe the world around us can teach us more about reality.
Feynman test for comprehension: “Try to restate what you have learnt in your own language without utilising the new word you have learned. Tell me about the motion of the dog without using the word “energy.”
Working with a variety of potential possibilities is preferable to using specific numbers, which are frequently silly.
Not how much they know, but how realistically they can explain what they don’t know, is what matters in investing. As long as they avoid major errors, investors need to do very few things right.
Ask the appropriate queries: “A problem’s formulation is frequently more important than its solution, which may only require mathematical or experimental skill,” A. Einstein
Ignore anything that makes what you wish to achieve difficult; you must always reverse.
Would you be okay with everyone you know seeing your deed on the front page of a newspaper? Live in the present, don’t be so concerned with the past or future.
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