Charlie Munger expands of various psychological tendencies of humans in his own book. He was a fan of “Influence” by Caldini but in his own book, Munger covers even more topics than Caldini did.

Key Themes 🧠

• Human psychology is predictably flawed – we have built-in biases and tendencies that lead to mistakes
• Understanding these biases is crucial for better decision-making
• The traditional academic approach to psychology often misses important real-world applications
• Multiple psychological tendencies often work together to create even bigger effects

Key Tendencies Covered

1. Reward & Punishment Response 🎯

• People are extremely sensitive to incentives
• Incentives are “superpowers” that can drive behavior
• Example: FedEx solved its night shift problems by changing from hourly pay to per-shift pay

2. Liking/Loving Tendency ❤️

• Humans automatically like/love what’s familiar
• Makes us ignore faults in things/people we love
• Can lead to poor judgment when emotions are involved

3. Disliking/Hating Tendency 😠

• Mirror image of liking tendency
• Makes us ignore virtues in things/people we dislike
• Often creates destructive conflict

4. Doubt-Avoidance Tendency 🤔

• People hate uncertainty and rush to conclusions
• Evolution programmed us to make quick decisions
• Can lead to poor choices when careful thought is needed

5. Inconsistency-Avoidance Tendency 🔄

• People strongly resist changing their minds or habits
• “Chains of habit are too light to be felt until they’re too heavy to be broken”
• Example: Darwin was rare in his ability to destroy his own ideas
• Early-formed habits often become destiny

6. Tendency 🔍

• Humans have strong innate curiosity
• Enhanced by advanced education
• Helps counter other bad psychological tendencies
• Provides lifelong learning and enjoyment

7. Kantian Fairness Tendency ⚖️

• People expect and demand fairness
• Based on Kant’s categorical imperative
• Shows up in everyday behaviors (like letting cars merge in traffic)
• Causes hostile reactions when fairness expectations are violated

8. Envy/Jealousy Tendency 👀

• One of the most destructive psychological forces
• “It is not greed that drives the world, but envy” – Warren Buffett
• Often ignored in psychology texts despite importance
• Creates major problems in organizations (like compensation disputes)

9. Reciprocation Tendency 🤝

• Humans strongly tend to return both favors and disfavors
• Can be manipulated (like in sales techniques)
• Creates both good results (trade, relationships) and bad (revenge cycles)
• Example: Ben Franklin’s technique of asking for small favors to gain influence

10. Influence-from-mere-association Tendency 🔗

• People make irrational connections based on mere association
• Used heavily in advertising
• Causes people to falsely connect past success with future outcomes
• Can lead to serious mistakes in business and investing

11. Simple Pain-Avoiding Psychological Denial 🙈

• Humans automatically distort/deny painful realities
• Very visible in cases of terminal illness or loss
• Particularly dangerous in addiction situations
• 50% success rate in AA shows how hard it is to overcome denial

12. Excessive Self-Regard Tendency 🪞

• People consistently overrate their own abilities
• Example: 90% of Swedish drivers rate themselves “above average”
• Creates the “endowment effect” – overvaluing what we own
• Leads to poor hiring decisions when face-to-face impressions are overweighted

13. Overoptimism Tendency 🎯

• “What a man wishes, that also will he believe” – Demosthenes
• Natural human condition, even without pressure
• Can be countered with probability mathematics
• Leads to many business and investment mistakes

14. Deprival-Superreaction Tendency 😠

• People hate losses much more than they value gains
• Almost-gains feel like losses
• Creates irrational behavior in negotiations
• Example: Munger missing out on Belridge Oil shares because he wouldn’t sell other investments

15. Social-Proof Tendency 👥

• People automatically think and act like others around them
• Strongest when combined with doubt and stress
• Used by cults and manipulative sales organizations
• Both good and bad behavior become contagious

16. Contrast-Misreaction Tendency 👓

• Brain judges by contrast rather than absolute measures
• Real estate agents use this by showing terrible houses first
• Makes people overpay for add-ons in big purchases
• Small changes often missed when they build up gradually

17. Stress-Influence Tendency 😰

• Light stress improves performance
• Heavy stress causes dysfunction
• Extreme stress can cause complete breakdown
• Example: Pavlov’s dogs completely changing behavior under flood stress

18. Availability-Misweighing Tendency 🧠

• People overweight easily available information
• Bright, vivid data gets too much emphasis
• Key rule: “An idea isn’t worth more just because it’s easily available”
• Best countered by formal checklists and procedures

19. Use-It-or-Lose-It Tendency 📉

• All skills degrade with disuse
• Like Paderewski practicing piano daily
• Requires continuous practice of important skills
• Need to maintain broad skill set to avoid “man-with-hammer tendency”

20. Drug-Misinfluence Tendency 💊

• Devastatingly powerful psychological force
• Interacts heavily with denial tendency
• Creates severe cognitive distortions
• Munger’s rule: Complete avoidance is only safe policy

21. Senescence-Misinfluence Tendency 👴

• Natural cognitive decay that comes with aging
• Different skills decline at different rates
• Well-practiced old skills maintain longer than new learning
• Can be partially countered with continuous mental exercise
• Most people develop ways to hide their decline

22. Authority-Misinfluence Tendency 👑

• Humans are programmed to follow authority figures
• Creates disasters when authority figures are wrong
• Particularly dangerous in professional settings (medicine, aviation)
• Example: Milgram experiment showing people will inflict pain when ordered
• Very hard to remove bad authority once established

23. Twaddle Tendency 🗣️

• People love to prattle and pour out “twaddle”
• Can severely damage serious work
• Must keep “twaddlers” away from important tasks
• Like a honeybee doing an incoherent dance

24. Reason-Respecting Tendency 🤔

• People naturally love accurate thinking
• Need to know “why” behind instructions
• Better compliance when reasons are given
• Example: Carl Braun’s communication rule requiring explanation of “why”

25. Lollapalooza Tendency 💥

• Multiple tendencies combining to create extreme effects
• Most important in real-world situations
• Often missed by academic psychology
• Can create both very good and very bad outcomes

Munger repeatedly emphasizes how these tendencies:

1. Are deeply rooted in human evolution
2. Create both positive and negative effects
3. Can be managed but never eliminated
4. Often work together to create bigger impacts

These tendencies are:

• Always working in combination
• More powerful than most people realize
• Both helpful and harmful
• Manageable with proper systems

Success Requires:

• Understanding these psychological tendencies
• Creating systems to manage them
• Continuous learning and adaptation
• Recognition of how they interact