Charlie Munger’s “Psychology of Human Misjudgment”
Munger’s paper on “The Psychology of Human Misjudgment” is a must-read. It’s one of the clearest looks at how human nature quietly distorts judgment.
It’s a framework for better decision-making, built from the overlap of economics, behavior, and experience. Munger called it a “latticework of mental models.”
He laid out 24 causes of human misjudgment that explain why even capable people make poor decisions. Such as...
1. Psychological denial: Painful facts get edited.
2. Consistency and commitment bias: Once stated, a view hardens.
3. Social proof: The crowd feels right even when it isn’t.
4. Deprival super-reaction: Loss hits harder than gain.
5. Authority bias: Titles can steer teams into bad choices.
6. Liking and disliking biases: We trust those we like and tune out those we don’t.
His most important point was how they combine. When several act together, judgment collapses, and success becomes increasingly unlikely.
To guard against that, he used tools like “inversion,” asking not “How do I win?” but “What would guarantee failure?”
He also forced himself to revisit mistakes, no matter how uncomfortable, and looked at problems from multiple disciplines to break out of narrow thinking.
Munger’s goal was to see reality more clearly and act with fewer blind spots.