Hello there, how’s your week been?

Now, let’s zoom in on a fascinating section from Poor Charlie’s Almanack, specifically Lecture 11, where Munger explains his list of the 25 causes of human misjudgment.

One of the key lessons he learned early on is that most psychology textbooks miss something very important: they don’t properly explain how different psychological tendencies interact with each other. These interactions often create complex, surprising outcomes.

To illustrate, he used examples from nature. Take ants, for instance. Their behavior is largely programmed by genetics. If one ant smells a pheromone that signals “dead ant,” it will carry the body outside the nest. In a famous experiment, scientists placed that pheromone on a live ant. The poor little guy struggled, but its fellow ants still dragged it outside as if it were dead. Ant brains are limited, so their responses are mechanical.

With this foundation, Munger takes us into the first of his 25 biases:

1. Reward and Punishment Super-Response Tendency

We all think we understand how incentives work, but the truth is, we underestimate their power again and again.

Take FedEx as an example. At one point, their night-shift workers often failed to load packages on time. Management tried reasoning, persuading, motivating… nothing worked. Then someone realized the real issue: paying workers by the hour actually rewarded slowness. So FedEx switched to paying by the shift. Once the job was done, workers could go home. Suddenly, efficiency skyrocketed.

As Benjamin Franklin once said: “If you want to persuade, appeal to interest, not reason.”、

This applies to management, politics, and even personal life. Get the incentives right, and behavior changes. Get them wrong, and disaster follows.

Munger even jokes about the Soviet Union: “They pretended to pay us, and we pretended to work.” That’s what happens when a system ignores incentives.

And incentives aren’t just about money. People change behavior for status, friendship, romance, recognition, and more. One classic tool he recommended is what he called Grandma’s Rule: “No dessert until you eat your vegetables.” In business terms, it means: do the tough, important tasks first — then reward yourself with the fun ones. It builds discipline, creates positive cycles, and makes organizations more effective.

2. Liking/Loving Tendency

The second bias Munger described is our tendency to love or admire people and ideas — sometimes blindly.

Think about baby geese. The first moving object they see after hatching, they follow as if it were their mother. Humans are similar. Babies are wired to love whoever takes care of them. And beyond childhood, we all crave affection and admiration, even from strangers.

The danger is this: when we love someone or something, we often ignore their flaws, bend facts in their favor, and remain loyal even when it hurts us. Love and admiration feed into each other in a powerful feedback loop.

Munger gave the example of Warren Buffett’s uncle Fred, who worked joyfully in his grocery store every day. Both Munger and Buffett admired him deeply, and that admiration shaped them for life. The people we love and admire can lift us up, sometimes more than we realize.

This is why it’s so important, Munger argued, to attract admirable people into key roles in society — like education. Their example inspires others to live better lives.

And that, my friends, brings us to the end of today’s episode. I hope you’ve taken away something useful about psychology, decision-making, and Charlie Munger’s wisdom.

If you enjoyed this episode, please subscribe and share it with someone who might benefit too.

And as always, I wish you wisdom in managing your money and your life — so you can live more fully, more happily, and more abundantly. Until next time, take care and see you soon!