Seeking Wisdom: From Darwin to Munger, 3rd Edition

SEEKING WISDOM: From Darwin to Munger (2007)(Third Edition)......Page 1
PERMISSION ACKNOWLEDGMENTS......Page 5
ACKNOWLEDGMENTS......Page 6
CONTENTS......Page 7
INTRODUCTION......Page 8
The Third Edition......Page 11
PART ONE: WHAT INFLUENCES OUR THINKING?......Page 12
01: OUR ANATOMY SETS THE LIMITS FOR OUR BEHAVIOR......Page 13
What we feel and think depends on neural connections......Page 14
Genes control brain chemistry but are turned on and off by the environment......Page 15
Interaction and flexibility characterize our biological functions......Page 17
Neural connections are shaped by life experiences......Page 18
Behavior is influenced by our state of mind......Page 19
Natural selection......Page 21
Darwin made the following three observations......Page 22
The evidence for evolution......Page 24
Guidance through values and life experiences......Page 26
The hunter-gatherer environment has formed our basic nature......Page 29
The individual comes first......Page 31
Often cooperation is in our best interest......Page 32
A tendency for fear......Page 34
Seeking explanations......Page 36
Males and females have different priorities......Page 37
The Social Animal......Page 39
Much of our psychology is the result of cultural influences......Page 42
Our basic nature......Page 43
Some decisions are not in our best interest......Page 44
PART TWO: THE PSYCHOLOGY OF MISJUDGMENTS......Page 47
01: MISJUDGMENTS EXPLAINED BY PSYCHOLOGY......Page 48
I. MERE ASSOCIATION......Page 51
Keep in mind......Page 52
2. REWARD AND PUNISHMENT......Page 53
Keep in mind......Page 57
3. SELF-INTEREST AND INCENTIVES......Page 58
4. SELF-SERVING TENDENCIES AND OPTIMISM......Page 63
Keep in mind......Page 67
Keep in mind......Page 68
6. CONSISTENCY......Page 69
Keep in mind......Page 74
7. DEPRIVAL SYNDROME......Page 76
Keep in mind......Page 79
8. STATUS Quo AND Do-NOTHING SYNDROME......Page 80
9. IMPATIENCE......Page 81
Keep in mind......Page 82
II. CONTRAST COMPARISON......Page 83
12. ANCHORING......Page 85
13. VIVIDNESS AND RECENCY......Page 86
14. OMISSION AND ABSTRACT BLINDNESS......Page 87
Keepinmind......Page 88
15. RECIPROCATION......Page 89
16. LIKING AND SOCIAL ACCEPTANCE......Page 90
Keep in mind......Page 92
17. SOCIAL PROOF......Page 93
Keep in mind......Page 97
18. AUTHORITY......Page 98
Keep in mind......Page 99
19. SENSEMAKING......Page 100
Keep in mind......Page 102
20. REASON-RESPECTING......Page 103
Keep in mind......Page 104
21. BELIEVE FIRST AND DOUBT LATER......Page 105
22. MEMORY LIMITATIONS......Page 106
Keep in mind......Page 107
23. DO-SOMETHING SYNDROME......Page 108
Keep in mind......Page 109
25. EMOTIONS......Page 110
Keep in mind......Page 111
26.STRESS......Page 112
Keep in mind......Page 113
28. MULTIPLE TENDENCIES......Page 114
CONTEXTUAL INFLUENCES......Page 117
SOME FINAL ADVICE FROM CHARLES MUNGER......Page 121
PART THREE: THE PHYSICS AND MATHEMATICS OF MISJUDGMENTS......Page 124
3. Causes......Page 125
6. Scenarios......Page 126
9. Misrepresentative evidence......Page 127
Wanted and unwanted consequences......Page 128
The whole system......Page 129
The winner's curse......Page 131
Predictions......Page 133
Scale of size and time......Page 137
Breakpoints, critical thresholds and limits......Page 139
Breakpoints, critical thresholds and limits......Page 141
Size and frequency......Page 143
Constraints......Page 144
Large effects......Page 145
Acting on symptoms......Page 146
Mistaking correlation for cause......Page 147
Selective data and appropriate comparisons......Page 148
Use basic math to count, quantify, and understand relationships......Page 151
The effect of exponential growth......Page 152
The time value of money......Page 153
05: PROBABILITIES AND NUMBER OF POSSIBLE OUTCOMES......Page 154
Number of possible outcomes......Page 158
Low frequency events......Page 159
Mathematical expectation......Page 161
Chance has no memory......Page 162
Controlling chance events......Page 163
Gains, losses and utility......Page 164
The consequences of being wrong......Page 165
Systems construction and planning processes......Page 168
Systems failure and accidents......Page 171
Safety factor......Page 174
Coincidences......Page 175
Making up causes for chance events......Page 176
Believing in miracles......Page 177
Prior probabilities......Page 179
Conditions, environments and circumstances change......Page 186
The single case or unrepresentative samples......Page 187
Chance and performance......Page 188
Ignoring failures......Page 189
Variability......Page 190
Effects of regression......Page 193
Post Mortem......Page 194
PART FOUR: GUIDELINES TO BETTER THINKING......Page 196
MODELS OF REALITY......Page 197
What characterizes a useful model?......Page 198
Considering many ideas help us achieve a holistic view......Page 199
How can we learn an idea so it sticks in our memory?......Page 201
Search for explanations......Page 202
02: MEANING......Page 207
Ask "What happens?"......Page 209
Simplify the way we do things......Page 220
Avoid certain things......Page 222
Focus leads to understanding and efficiency......Page 223
Ask the right questions......Page 224
Patience......Page 225
04: RULES AND FILTERS......Page 226
Filters......Page 227
Checklist procedures......Page 229
05: GOALS......Page 231
Opportunity cost......Page 233
07: CONSEQUENCES......Page 236
08: QUANTIFICATION......Page 239
The methods of science......Page 246
Test......Page 247
Observation......Page 248
Falsify and disprove......Page 249
10: BACKWARD THINKING......Page 252
11: RISK......Page 256
A fool and his money are soon parted......Page 257
Margin of safety......Page 258
Life is long if we know how to use it......Page 260
Be honest......Page 262
Act as an exemplar......Page 263
Don't take life too seriously......Page 264
Have reasonable expectations......Page 265
The End......Page 266
Prescriptions for Guaranteed Misery in Life......Page 267
On how to change people......Page 271
On the difficulty of replacing a CEO......Page 272
On the kind of people we should do business with......Page 273
On overconfidence......Page 274
On some reasons to why bad lending happen so often......Page 275
On advantages of scale......Page 276
On disadvantages of scale......Page 278
On what something really mean......Page 279
On how to evaluate businesses......Page 280
On commodity businesses......Page 281
On how to avoid problems......Page 282
On the difficulty of developing a fair social system......Page 283
Definitions......Page 285
Relative frequency......Page 286
Rules of probability......Page 287
Counting possible outcomes......Page 289
The binomial distribution......Page 290
Calculations to some of the examples......Page 292
Understand what it means......Page 294
What is the canse of that?......Page 295
What ate the consequences?......Page 296
Look for evidence and judge the evidence......Page 297
Disprove my (or others) conclusion by thinking like a prosecutor......Page 298
What is the value?......Page 299
What exacdy is the problem?......Page 300
What are the consequences?......Page 301
Filter 2 - Does it look like the business has some kind of sustainable competitive advantage?......Page 302
Filter 6 - What are the consequences ifI'm wrong?......Page 303
SOURCE NOTES......Page 304
BIBLIOGRAPHY......Page 314