The Psychology of Human Misjudgment (28 Tendencies)

MISJUDGMENTS EXPLAINED BY PSYCHOLOGY

I came to the psychology of human misjudgment almost against my will; I rejected it until I realized that my attitude was costing me a lot of money, and reduced my ability to help everything I loved.

• Charles Munger

Pain and pleasure, social influence, aversion to loss, and perceived self-interest shape our judgments. Charles Munger says, "If you want to avoid irrationality, it helps to understand the quirks in your own mental wiring and then you can take appropriate precautions." Bevelin presents 28 reasons for misjudgments rooted in our psychological make-up. Many of the reasons are rooted in psychological tendencies and biases that often influence us subconsciously. The more emotional, confused, uncertain, insecure, excited, distracted, tired or stressed we are, the easier we make mistakes. Geniuses aren't excluded.

The following 28 items can serve as a checklist when reviewing a decision or trying to avoid fooling ourselves.

1. Bias from mere association - automatically connecting a stimulus with pain or pleasure; including liking or disliking something associated with something bad or good. Includes seeing situations as identical because they seem similar. Also bias from Persian Messenger Syndrome - not wanting to be the carrier of bad news.
2. Underestimating the power of rewards and punishment - people repeat actions that result in rewards and avoid actions that they are punished for.
3. Underestimating bias from own self-interest and incentives.
4. Self-serving bias - overly positive view of our abilities and future. Includes over-optimism.
5. Self-deception and denial - distortion of reality to reduce pain or increase pleasure. Includes wishful thinking.
6. Bias from consistency tendency - being consistent with our prior commitments and ideas even when acting against our best interest or in the face of disconfirming evidence. Includes confirmation bias - looking for evidence that confirms our actions and beliefs and ignoring or distorting disconfirming evidence.
7. Bias from deprival syndrome - strongly reacting (including desiring and valuing more) when something we like and have (or almost have) is (or threatens to be) taken away or "lost." Includes desiring and valuing more what we can't have or what is (or threatens to be) less available.
8. Status quo bias and do-nothing syndrome - keeping things the way they are. Includes minimizing effort and a preference for default options.
9. Impatience - valuing the present more highly than the future.
10. Bias from envy and jealousy.
11. Distortion by contrast comparison - judging and perceiving the absolute magnitude of something not by itself but based only on its difference to something else presented closely in time or space or to some earlier adaptation level. Also underestimating the consequences over time of gradual changes.
12. Bias from anchoring - over-weighing certain initial information as a reference point for future decisions.
13. Over-influence by vivid or the most recent information.
14. Omission and abstract blindness - only seeing stimuli we encounter or that grab our attention, and neglecting important missing information or the abstract. Includes inattentional blindness.
15. Bias from reciprocation tendency - repaying in kind what others have done for or to us like favors, concessions, information and attitudes.
16. Bias from over-influence by liking tendency - believing, trusting and agreeing with people we know and like. Includes bias from over-desire for liking and social acceptance and for avoiding social disapproval. Also bias from disliking - our tendency to avoid and disagree with people we don't like.
17. Bias from over-influence by social proof - imitating the behavior of many others or similar others. Includes crowd folly.
18. Bias from over-influence by authority - trusting and obeying a perceived authority or expert.
19. Sensemaking - Constructing explanations that fit an outcome. Includes being too quick in drawing conclusions. Also thinking events that have happened were more predictable than they were.
20. Reason-respecting - complying with requests merely because we've been given a reason. Includes underestimating the power in giving people reasons.
21. Believing first and doubting later - believing what is not true, especially when distracted.
22. Memory limitations - remembering selectively and inaccurately. Includes influence by suggestions.
23. Do-something syndrome - acting without a sensible reason.
24. Mental confusion from say-something syndrome - feeling a need to say something when we have nothing to say.
25. Emotional arousal - making hasty judgments under the influence of intense emotions. Includes exaggerating the emotional impact of future events.
26. Mental confusion from stress.
27. Mental confusion from physical or psychological pain, the influence of chemicals or diseases.
28. Bias from over-influence by the combined effect of many psychological tendencies operating together.

These psychological tendencies (that also interact) have been verified by a number of experiments. Some people are more vulnerable to them than others. But we can't study them independent of an individual's values and the situation. Behavior that seems irrational may be fully rational from the individual's point of view. There is always some background within which behavior makes sense. Behavior can't be seen as rational or irrational independent of context. We are created with a series of emotions that are appropriate depending on circumstances. If we change context or environment, we change behavior.

These 28 tendencies overlap and often interact. A given behavior can have several explanations. Many of the real-world illustrations can be explained by more than one tendency and also by non-psychological factors. Misjudgments are often caused by many factors working together.

Most of the explanations are based on work done by Charles Munger, Psychology Professor Robert Cialdini, Behavioral Science and Economics Professor Richard Thaler, Psychology Professor Robyn Dawes, Psychology Professor Daniel Gilbert, and Psychology Professors Daniel Kahneman and the late Amos Tversky.