The power that incentives and disincentives have on the actions of others cannot be overstated. Munger says this should be obvious but so many people don’t understand the how important incentives are for shaping people’s motivation to complete a task.
Incentives and disincentives are extremely important in changing behavior.
Just follow Benjamin Franklin’s Maxim:
“If you would persuade, appeal to interest and not to reason”
“Never think about something else when you should be thinking about the power of incentives.”
“Incentives will almost always trump any moral duty”
‘The most important rule in management “Get the incentives right”‘
“Bad behavior is intensely habit forming when it is rewarded.”
These were some quotes from Charlie Munger on Reward and Punishment Super Response…
We ignore the faults of other people, products or companies that we admire.
According to Charlie Munger, a newly arrived human is born to like and love, and the strongest inborn tendency to love is that of a mother for its child.
Liking/Loving tendency makes the liker or lover tend to:
To ignore the faults of, and comply with wishes of the object of its affection.
To favor people, products and actions merely associated with the object of his affection as seen in bias 10 – influence from mere association.
To distort other facts to facilitate love.
We also ignore the virtues of those things we dislike and distort the facts to facilitate that hatred while putting on blinders to other options and opinions.
Disliking/Hating Tendency happens from the time the newly arrived human is also born to “dislike and hate”
1) Ignore the virtues in the object of dislike.
2) Dislike people products and actions merely associated with the object of his dislike.
3) Distort other facts to facilitate hatred.
Disliking distortions often makes mediation between opponents locked in hatred either difficult or impossible.
All from Charlie Munger’s Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger, Expanded Third Edition
If we are unsure about a decision we try to quickly remove any doubt by making an ill-informed, quick decision, this is doubt-avoidance tendency
Doubt-avoidance tendency is triggered by some combination of puzzlement and stress.
We have a reluctance to change. Eliminating bad habits is a rare trait.
The brain of man conserves programming space by being reluctant to change, which is a form of inconsistency avoidance.
Factors that create an anti-change and Inconsistency Avoidance Tendency mode in humans:
It facilitated faster decisions when speed of decision was an important contribution to the survival on nonhuman ancestors that were prey.
It facilitate the survival advantage that our ancestors gained by cooperating in groups, which would have been more difficult to do if everyone was always changing responses.
It was the best form of solution that evolution could get to i
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