Quick Intro

We humans have evolved over tens of thousands of years in an environment that is very different than the one we live in now. During this evolution process, we developed unconscious biases, which helped us survive in those tough environments, but can hinder us in today’s modern society.

By recognizing those biases and applying them to our decision-making, we can make infinitely better decisions.

Below, you can find links to some of the most important cognitive biases that influence our thinking, and also the thinking of people we are connected with personally or professionally.

Charlie Munger’s List Of 25 Cognitive Biases

It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent. There must be some wisdom in the folk saying, `It’s the strong swimmers who drown.—Charlie Munger

Over his 70-year career, Charlie Munger (Warren Buffett’s long-time business partner) has done exactly this. The end result is the list of 25 psychological biases that cause us to make bad decisions, which we excerpted and condensed from several of Munger’s speeches.

You can view this list and start getting familiar with the biases below.

Understand Buying Biases

Buying Biases (Click round knobs to go deeper)

Curiosity Tendency ✓ Classical Conditioning ✓ 1. Advertisement (Capture attention) ✓ 2. Funnel (Educate & build trust) ✓ 3. The Sale (Exchange product &am...

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Buying Biases (Click round knobs to go deeper)

Fundamental Attribution Error

Fundamental Attribution Error: This Cognitive Bias Destroys Relationships

Author Note: This is the first in a series that will give short summaries of the most useful and universal mental models in the world. Follow our Accelerated Intelligence publication if you'd like to...

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Fundamental Attribution Error: This Cognitive Bias Destroys Relationships

Top Books Related To Investing

Mastering the Market Cycle: Getting the Odds on Your Side

Amazon.com: Mastering the Market Cycle: Getting the Odds on Your Side (Audible Audio Edition): Howard Marks, LJ Ganser, Howard Marks, Audible Studios: Books

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Mastering the Market Cycle: Getting the Odds on Your Side

Market Wizards: Interviews with Top Traders

Market Wizards: Interviews with Top Traders - Kindle edition by Schwager, Jack D.. Download it once and read it on your Kindle device, PC, phones or tablets. Use features like bookmarks, note taking and highlighting while reading Market Wizards: Interviews with Top Traders.

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Market Wizards: Interviews with Top Traders

The Most Important Thing: Uncommon Sense for the Thoughtful Investor (Columbia Business School Publishing)

Amazon.com: The Most Important Thing: Uncommon Sense for the Thoughtful Investor (Columbia Business School Publishing) eBook : Marks, Howard: Kindle Store

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The Most Important Thing: Uncommon Sense for the Thoughtful Investor (Columbia Business School Publishing)

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success

The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success - Kindle edition by Thorndike, William. Download it once and read it on your Kindle device, PC, phones or tablets. Use features like bookmarks, note taking and highlighting while reading The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success.

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The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success

Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail - Kindle edition by Dalio, Ray. Download it once and read it on your Kindle device, PC, phones or tablets. Use features like bookmarks, note taking and highlighting while reading Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail.

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Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail

Navigate Other Mental Models On Super Thinking

Outlier Algorithm

In many ways, humans are designed for social conformity. Conforming is easier, and it works 99% of the time. An original thinker, however, knows that social and expert authority is often right, but that it can also be incredibly wrong too. So, the original thinker looks for holes in the consensus view and capitalizes on them. This model shows how you can do it too.

Cognitive Biases

Humans have evolved over tens of thousands of years in an environment that is very different than the one we live in now. During this process, we developed unconscious biases which helped us survive in those tough environments, but can hinder us in today’s modern society. By recognizing those biases we can make infinitely better decisions.

Fundamental Attribution Error

The Fundamental Attribution Error states that when we try to explain other people’s bad behavior, we tend to overemphasize their personality and underemphasize the situation they were in. This leaves people feeling unappreciated and destroys relationships. It can lead to a chain reaction of frustration, disengagement, subpar performance, further judgment, toxicity, and ultimately parting ways.

Insight

Most of the time when we say “insight,” we’re referring to realizations we have, often related to our relationships or personal lives. These insights are great but for this manual, we’re talking about market-based insights, where “market” is about building products, services, art, or ideas that people give their money or attention to.

Triune Brain

Dr Paul MacLean, the author of the Triune Brain Theory, was a neuroscientist who discovered that, basically, our brain is a three-nested organ. Having this model in mind can help us move through the world by de-composing a situation and looking at it through different lenses, each corresponding to a different reality.

Second-Order Effects

There are consequences to each action, and there are consequences to consequences. These are called Second-Order Effects. Ultimately, it’s impossible to predict all the consequences perfectly, but some of them are really predictable, and the better of a model you have, the better you'll be prepared to notice the opportunity in your industry.

Scenario Planning

When most people think about scenarios, they either think only about the positive scenarios (if they’re setting a goal), or only about the negative outcomes (if they’re in worry mode), and they usually focus only on the short term. With scenario planning, you expand your perspectives by thinking about both the positive and negative and by extending into the long term.

Polarity Map

Polarity Map is a simple model. When you're talking about an issue, there are always two sides, and there's a pro and con to each side. However, on each issue where there's a polarity, the opportunity is to see both sides of the polarity. It’s about collecting information, being open to hearing “the other side,” and actually being actively open-minded by going out and searching for opposing perspectives.

Reinvention, Part 10: Reinvent Your Thinking

In this session we're focusing on reinventing our thinking.

Wisdom Wheel

The Wisdom Wheel is a method for solving problems that uses humanity’s collective wisdom instead of relying solely on our own thinking and on trial and error.