His most important talk
The 25 Causes of Human Misjudgment
Munger never took a psychology course. He built his own checklist of the mental tendencies that make human beings predictably irrational — then used it, in reverse, to avoid stupidity. Listen to the original 1995 talk, then work through the tendencies one at a time.
- 01 Reward and Punishment Superresponse Tendency People respond to incentives far more strongly than almost anyone expects, so to predict behavior, look first at what is being rewarded.
- 02 Liking/Loving Tendency We distort our judgment to favor people, products, and ideas we like — ignoring their faults and accepting whatever they tell us.
- 03 Disliking/Hating Tendency Once we dislike someone, we ignore their virtues, dislike everything associated with them, and distort the facts to keep our hatred fed.
- 04 Doubt-Avoidance Tendency The mind is wired to remove the discomfort of doubt by reaching a decision fast — which is dangerous when the situation demands patient uncertainty.
- 05 Inconsistency-Avoidance Tendency The mind resists changing its conclusions, habits, and commitments — so first conclusions and first loyalties tend to stick long past their usefulness.
- 06 Curiosity Tendency A built-in drive to learn — the rare tendency that is mostly a force for good, helping counteract the others if you cultivate it.
- 07 Kantian Fairness Tendency People expect and extend fair, reciprocal behavior — and react badly when an expected fairness is violated, even at cost to themselves.
- 08 Envy/Jealousy Tendency Comparing ourselves to others breeds envy — a powerful, miserable driver of behavior that, unlike other vices, brings no pleasure at all.
- 09 Reciprocation Tendency We feel a strong urge to repay favors, concessions, and hostility in kind — which can be triggered deliberately to extract things we'd never otherwise give.
- 10 Influence-from-Mere-Association Tendency We let mere coincidental association — a pleasant image, a past success, a bearer of bad news — distort judgment about unrelated things.
- 11 Simple, Pain-Avoiding Psychological Denial When reality is too painful to bear, the mind simply distorts it into something bearable — believing what it must to keep functioning.
- 12 Excessive Self-Regard Tendency We systematically overrate ourselves, our possessions, and our conclusions — most people sincerely believe they are above average.
- 13 Overoptimism Tendency Even absent any threat, people are wired to expect things to turn out better than the odds warrant.
- 14 Deprival-Superreaction Tendency We react far more strongly to a loss, or even a threatened loss or near-miss, than to an equivalent gain — which makes us irrational about both.
- 15 Social-Proof Tendency When unsure how to act, people copy the crowd — automatically and often without thinking, especially under stress or confusion.
- 16 Contrast-Misreaction Tendency We judge things by contrast with what's next to them rather than by their true value — which can be exploited to make bad deals look good.
- 17 Stress-Influence Tendency Stress speeds up and intensifies the other tendencies, and heavy stress can cause sudden, sometimes lasting, breakdowns in judgment.
- 18 Availability-Misweighing Tendency The mind overweights whatever is vivid, recent, or easy to recall, and underweights what's important but hard to bring to mind.
- 19 Use-It-or-Lose-It Tendency Skills and knowledge fade without practice, so the antidote is lifelong, deliberate use of what you've learned.
- 20 Drug-Misinfluence Tendency Chemical dependency warps judgment and self-perception, and almost always leads to moral and cognitive decline.
- 21 Senescence-Misinfluence Tendency Cognitive decline comes with age — but continuous learning and practice slow it, so the response is to keep the mind working.
- 22 Authority-Misinfluence Tendency People are wired to follow leaders and experts, sometimes obeying authority straight into disaster against their own judgment.
- 23 Twaddle Tendency People produce and consume large amounts of empty talk, which crowds out and distracts from serious work.
- 24 Reason-Respecting Tendency People comply far more readily when given a reason — which aids real learning but can be exploited by stating a meaningless 'because.'
- 25 Lollapalooza Tendency When several tendencies fire in the same direction at once, their combined effect is not additive but explosive — producing extreme, non-linear outcomes.
Common questions
- What is “The Psychology of Human Misjudgment”?
- A talk Charlie Munger first gave in 1995 and rewrote in 2005 for Poor Charlie's Almanack, cataloguing roughly 25 psychological tendencies that lead people into predictable error — and how they combine into what he called a lollapalooza.
- How many tendencies are there — 24 or 25?
- The original 1995 spoken talk listed about 24. The revised 2005 written version expanded the list to 25, adding the Lollapalooza Tendency as a capstone.
- What is the lollapalooza effect?
- Munger’s term for what happens when several of these tendencies push in the same direction at once, producing extreme, non-linear outcomes — bubbles, cult behaviour, and the open-outcry auction among them.