Many people would argue that they are rational. They weigh up their options, consider the evidence and arrive at sensible conclusions.
Most people are wrong about this.
And not because of a lack of intelligence. Neither does that mean people are entirely incapable of being rational.
The human brain has evolved to process enormous amounts of information quickly; recognising patterns, reacting to threats and projecting likely outcomes, often before conscious thought catches up.
But in order to do that efficiently, it also evolved to take shortcuts, which can be useful. When based on the wrong information, however, those same shortcuts can have serious ramifications.
Charlie Munger spent much of his life cataloguing these shortcuts.
Then, in 1995, he gave a talk at Harvard outlining twenty-five systematic errors that the human brain is prone to making, which he called Tendencies.
In short, they refer to specific patterns and instances where those shortcuts fail.
Why Munger’s Misjudgements?
The goal here isn’t to produce a definitive guide to human psychology, or even to determine the accuracy of his observations.
Munger was content to admit that he had no formal training in psychology. But he had developed a way of explaining it that was useful to him.
Better yet, his observations come from real-world application rather than academic research.
That’s not to dismiss the works of the likes of Kahneman, which have obvious merit. But you don’t have to go that deep to start benefiting from understanding bias.