“The Psychology of Human Misjudgment”

The strong tendency of employees to rationalize bad conduct in order to get rewards requires many antidotes in addition to the good cash control promoted by Patterson.

As I review in 2006 this talk made in 1986, I would not revise a single idea. If anything, I now believe even more strongly that 1) reliability is essential for progress in life and 2) while quantum mechanics is unlearnable for a vast majority, reliability can be learned to great advantage by almost anyone. Indeed, I have often made myself unpopula

Charlie Munger, Warren Buffett’s partner and vice chairman of Berkshire Hathaway, stresses the importance of having a broad theoretical toolbox – not to be a good academic, but to have a good, pragmatic grip on reality. He regularly explains to students which mental models have proven most useful to help him understand markets and human behaviour.

So what makes sense for the investor is different from what makes sense for the manager. And, as usual in human affairs, what determines the behavior are incentives for the decision maker, and getting the incentives right is a very, very important lesson. From all businesses, my favorite case on incentives is Federal Express.23 The heart and soul o

The brain of man conserves programming space by being reluctant to change, which is a form of inconsistency avoidance.