The Art of Thinking Clearly

Whenever you are about to make a decision, think about which authority figures might be exerting an influence on your reasoning. And when you encounter one in the flesh, do your best to challenge him or her.

Write down your predictions—for political changes, your career, your weight, the stock market, and so on. Then, from time to time, compare your notes with actual developments. You will be amazed at what a poor forecaster you are. Don’t forget to read history, too—not the retrospective, compacted theories compiled in textbooks, but the diaries, oral

Stories are dubious entities. They simplify and distort reality and filter things that don’t fit. But apparently we cannot do without them.

Social proof, sometimes roughly termed the “herd instinct,” dictates that individuals feel they are behaving correctly when they act the same as other people. In other words, the more people who follow a certain idea, the better (truer) we deem the idea to be. And the more people who display a certain behavior, the more appropriate this behavior is

this, too. Instead of focusing on an item’s benefits, they create a story around it. Objectively speaking, narratives are irrelevant. But still we find them irresistible. Google illustrated this masterfully in

The sunk cost fallacy is most dangerous when we have invested a lot of time, money, energy, or love in something. This investment becomes a reason to carry on, even if we are dealing with a lost cause. The more we invest, the greater the sunk costs are, and the greater the urge to continue becomes.

The human brain seeks patterns and rules. In fact, it takes it one step further: If it finds no familiar patterns, it simply invents some.

According to Charlie Munger, one of the world’s best investors (and from whom I have borrowed this story), there are two types of knowledge. First, we have real knowledge. We see it in people who have committed a large amount of time and effort to understanding a topic. The second type is chauffeur knowledge—knowledge from people who have learned t

In conclusion: When it comes to pattern recognition, we are oversensitive. Regain your skepticism. If you think you have discovered a pattern, first consider it pure chance. If it seems too good to be true, find a mathematician and have the data tested statistically.