Brady F. Anderson

Seeking Wisdom: From Darwin to Munger

My Notes

Our neural connections depend on our personal experiences. Understanding other people’s behavior can be difficult because our brains are wired differently as a result of varied experiences.

Pain, hunger, stress, relaxation, and other mental states radically change our behavioral outcomes.

Darwin observed:

  1. Not all members of a species survive and reproduce because of competition between individuals and/or for resources and environmental changes that reduce success.
  2. Individuals within species vary immensely and these variations must be inheritable
  3. Evolution is constant, species change, go extinct, or emerge.

These combine to form the basis of the idea called natural selection

Our brains are more sensitive to pain than other stimuli. We perceive losses as more painful than the pleasure experienced from gains of equal value. Our brains do their best to avoid other mental pains, like failure and being wrong, even if outcomes would be better without pain avoidance.

Our brains operate using pattern recognition, not if-then logic. This means our decision-making capabilities are reliant on patterns we have experienced or can identify. Patterns often take the form of cause-effect relationships.

People are self-interested, not altruistic, by natural selection. However, it is often in our best interest to cooperate (see tit-for-tat in game theory).

Reciprocity works when 1) it happens in small groups where there are future opportunities to interact and easy to remember favors, and 2) when there are not large imbalances between the cost of the favor and future received favors.

The Psychology of Misjudgments

Bias from mere association: evaluating people, situations, and objects as either good or bad based on the sensations like pleasure or pain associated with them.

Bad behavior is enabled by lack of disincentives and becomes difficult to stop.

When we fail, we blame it on external circumstances or bad luck. When we succeed, we attribute it to our character and actions. We judge others in the opposite manner, attributing their successes to luck and failures to character. This makes us draw incorrect cause-effect conclusions, prevents learning, and underestimate the roles of luck and randomness.

We need to develop multiple strengths lest we fall victim to Munger’s man-with-a-hammer syndrome. Having only method or theory of approaching problems forces you to mold your vision of reality to your solution. Ideas from multiple disciplines prevent this fallacious outcome.

“We behave in ways consistent with how other people see us. If people label us talented, we try to appear talented whether or not it is true.” (60) This can inspire good and bad behavior, think of the people who embrace the titles like “heavyweights” or “leader.” The former drinks more than they would like to, the latter leads even when it is unnatural.

We often let sunk costs influence our next decisions. These sunk costs are not just financial. They could be incorrect ideas you’ve invested yourself in, faulty education you received but spent years learning, or time spent in a bad relationship.

Contrast distorts perception and judgement. A $20 monthly Peleton fitness subscription doesn’t seem like much after a $1500 stationary bike purchase. Exceeding low expectations always feels good even if the achievement isn’t notable.

Our brains cling to stories and find them to be more believable than data and evidence.

“People don’t like to feel indebted. We are disliked if we don’t allow people to give back what we’ve given them.” (81)

We perceive others in ways we believe they perceive us. E.g. I believe she likes me, so this makes me like her too.

Explanations tend make us more trusting, even if those explanations are batshit crazy.

From Thoreau: “It is not enough to be busy; so are the ants. The question is: What are we busy about? Don’t confuse activity with results.

From Mark Twain: “I’ve suffered a great many catastrophes in my life. Most of them never happened.”

Our brains often optimize for components and lose sight of the overall performance of the whole.

“Predictions about the future are often just projections of past curves and present trends.” (126)

We believe large, complicated effects must have large, complicated causes, when no such relationship is necessary

Selective data can misinform conclusions on cause-effect relationships.

Reducing risk is achieved by reducing the number of negative outcomes and the severity of those outcomes.

Always build a margin of safety into your decisions, especially when failure is particularly harsh.

“What is true depends on the amount of evidence supporting it, not by the lack of evidence against it.” (168)

Avoid numbers blindness. Too many people focus on data that can be counted and manipulated and fail to incorporate noncountable information into their decisions.

Albert Einstein: “If you can’t explain it simply, you don’t understand it well enough.”

When we observe, we usually color the information we receive with contexts, theories, ideas, or experiences we’ve had in the past.