Scam Psychology: Charlie Munger on How You Screw Up: Part 3 of 6

Charlie Munger (Photo credit: Wikipedia)

You may have heard of Charlie Munger. But if you haven't, you should have heard of his partner: Warren Buffet, one of the 5 richest man in the world.  In 1995, Charlie Munger gave a speech at Harvard... about how people misjudge things. Here's my personal interpretation of his lessons, as applied to network marketing. You can read the full speech.  Please also check out the previous sections 1-4, and 5-8

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In the speech given at Harvard in 1995, Charlie Munger identified what he called "24 standard causes of human misjudgment." What he really meant is "24 reasons why you screw up".  Here is 9 through 12

9) Failure to Recognize Contrast Bias

Contrast bias is simple to explain... If I give you one item and ask you to rate it, you will give your honest opinion. However, if I have you rate that item, plus an HORRIBLE item, that original item will be rated higher, on the average, because there's a contrasting item.

Here's a simple experiment by Professor Cialdini. Two buckets of water, one quite cold, one quite hot (neither will actually harm). Volunteers are asked to put one hand in hot water and one hand in cold water for 5-10 seconds. Then both are removed and placed in the same bucket of water. The hand what was in hot water now feels cold, and the hand what was in cold water now feels warm/hot, but they are feeling the SAME bucket of water. It's the contrast that makes the water feel hot or cold.

And this experience shows up everywhere. It's often recommended in some pickup artistry books that you bring along an ugly friend or two to make yourself look better. This is the same idea: contrast.

A somewhat anecdotal and apocryphal real estate sales technique if you want to get rid of a not-so-good property is you show the prospects two really awful properties, have them go tsk-tsk and shake their head, then you take them to this "better" property, and they'll probably bite.

On the flip side, without a contrast or a measure against a neutral background (control group), you may not be aware of creeping changes. This can be termed "anti-contrast bias".

Then there's the "boiled frog" urban legend, where the claim is if you put a frog in a pot of water, but you cook it VERY VERY slowly, the frog will never jump out. It's not true, but it's an interesting legend and illustrates this point. You can "creep" in changes and if the movement is small enough it may escape notice.

So beware of this being used on you... Either a special contrast example is used to make a position to look better or worse than it really is... this coercing a bias, or someone tried to "creep" in some changes and rely on your momentum bias to say nothing.



10) Failure to recognize Over-influence by authority