Human Misjudgment : Deprival Super Reaction Syndrome

Imagine the following scenario. You are sitting at your work desk sipping your coffee when your boss comes and offers you the following deal.   He offers you a fixed bonus of Rs 1 crore for the year. Besides this, he offers you a variable bonus. For the variable bonus, he asks you to either […]

Human Misjudgment : Authority

Authority, authority!” they shout Whose minds, not large enough to hold a doubt, Some chance opinion ever entertain, By dogma billeted upon their brain. ~ Ambroce Bierce   There is one thing we all have been taught from very beginning and that is to accept what our elders tell us; to accept their authority.   […]

Human Misjudgment : Endowment Effect

Today I discuss the human trait that, despite all its glory, has lead to disastrous consequences for many individuals and societies and specifically in investment world.   In fact, if there is one trait which, even though I do frequently observe in successful people in various other human endeavors, is very rare to find in […]

Human Misjudgment : Social Proof

Few years back, while buying a book on Amazon, I ended up buying two more books along with the intended purchase.   It was due to a feature of Amazon, which tells you what other buyers have bought along with the book you are trying to purchase. I never heard of these books earlier but […]

Human Misjudgment : Confirmation Bias

“I hated discussing ideas with investors, because I then became a defender of the idea and that influences your thought process.” ~ Michael Burry (The Big Short)   I’m sure this is one statement most of you will relate to. We often discuss stock ideas which, we understand, are contingent to future events but if we […]

Human Misjudgment : Reciprocation

If you are sitting in a dark and unknown place for long time and someone switches on a light source, the initial feeling is of discomfort (especially for eyes). But once you get comfortable, you realize how different that place is from what you initially thought it to be.   In my college days, I […]

Human Misjudgment : Love and Hate

By the time you read this article, the world’s largest economy would have decided its President for the next 4 years.   There is always an excitement in the markets worldwide when it comes to the US election and especially this time, given the state of the US and world economy. The parties have left […]

Human Misjudgment : Incentive Caused Bias

Let me begin by thanking all the readers for their appreciation of the previous article on ‘availability bias’. And a special thanks to a particular reader, who indirectly gave me the idea about how I wanted to present this next nugget of wisdom by Munger.   This goes on in form of a conversation over […]

Human Misjudgment Series Introduction

  There are only two ways of clearing an exam. The first involves rigorous reading of the books and understanding the fundamental concepts which a subject is trying to teach, and develop a framework.   Once you have a framework, you then assimilate additional information (either via theory or via practical in labs) on that […]

Human Misjudgment : Availability Bias

  Are you planning to buy a specific car? Go out and you will start noticing that so many people have the same car. You never noticed it was so damn popular! Astrology column told you that your lucky number is 999, and miraculously you started seeing that number frequently (house numbers, phone numbers, license […]