Being surrounded always by worse outcomes are not unconnected to the mental mistakes you often make. The earlier you are aware of some of the psychological tendencies, the better you save yourself from the biases that bring about bad decisions.
From his “The psychology of human misjudgment,” (a 1995 speech so loaded with wisdom and usefulness) Charlie Munger C, vice chairman at Berkshire Hathaway spoke about the cognitive biases that cause people to fool themselves in life and business. He did pondered on human nature and tendencies that guaranty worse outcomes.
Are you guilty of these mental mistakes I summarized below? as put forward by Munger:
We also ignore the virtues of those things we dislike and distort the facts to facilitate that hatred while putting on blinders to other options and opinions i.e. we don’t only dislike things or persons, but ignores the views and virtues put forward by them.
“… and the tendency to be especially susceptible to being misled by someone liked,” Munger added
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If we are unsure about a decision we try to quickly remove any doubt by making an ill-informed, quick decision.
In this tendency, Munger says humans always want to do the good things, by willing to return the favors when someone helps. According to him, the move can lead to poor decisions if you reciprocate business deals based on these minor favors.
What you think may change what you do, but perhaps even more important, what you do will change what you think.
There is not enough curiosity to learn, even though you receive so many benefits from a continuous learning process. “the curious are also provided with much fun and wisdom once formal education has ended,” says Munger.
Excessive Self-Regard Tendency
The greatest type of pride should be taking pride in being trustworthy to avoid developing an ego, says Munger. Overconfidence plunges when we think we are above average.
Kantian Fairness Tendency
You can learn to tolerate little unfairness if it means a greater fairness for all. Munger use the normal routine on the freeway as an example i.e. letting in other drivers on the freeway knowing they will reciprocate in the future.