The Blindspot: Extreme Incentives - Deepstash

The Blindspot: Extreme Incentives

There is a blindspot hidden in this behaviour we all have, to see others mistakes instantly but not our own.

High incentives and other motivations are invisible, but everyone is susceptible to them. Incentives cloud our judgement, morality and often prompt us to do things that are not really moral, and we then end up justifying them.

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MORE IDEAS FROM Other People’s Mistakes

It should not be a surprise that most people do not agree with each other.

  • We often judge others due to lack of context, or lack of information about what is really happening. 
  • Things begin to make sense given enough information.
  • Everyone has had a different kind of life experience with money, relationships, job and family. 
  • Most of that isn’t visible to anyone judging the other person.

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Other People Always Look Stupid

In the book Thinking, Fast and Slow, Daniel Kahneman states that we instantly recognize other people’s stupidity, slips and mistakes, but not our own.

When we see other people we instantly judge their actions as silly or sound, but when we make a mistake ourselves, we have long justifications ready, adding context to our stupid actions that would not be known to anyone.

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Instantly, at face value, it is hard to differentiate between recklessness and boldness, ambitions and greed, a genius and an idiot.

Circumstances, luck and other external factors often end up making something look like what it isn't.

We are not really as great as we think we are, and other people aren’t really as bad as we think.

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RELATED IDEA

Markets change, but greed and fear never do.

Industries change, but ambition and complacency don’t.

Laws change, but the tribal instincts of politics don’t.

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Decision Making Process

The decision making process that Dalio, Buffett and Munger use is:

  1. Make the most rational decisions you can;
  2. Look for psychological bias that may have interfered with making a rational decision; and
  3. Expose your hypothesis to very smart people who have a thoughtful contrary view and deeply understand their position.

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Buridan’s Ass

A thirsty donkey is placed exactly midway between two pails of water. It dies because it can’t make a rational decision about which one to choose. A form of decision paralysis.

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