Charlie Munger's 2-Step Decision Process

Charlie Munger's 2-Step Decision Process

An approach to decision making that prevents manipulation:

  1. Understand the forces at play: know what you know and what you don’t know.
  2. Understand how your subconscious might be leading you astray: there are many causes of human misjudgment, including over-confidence.
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RELATED IDEAS

The way you frame your decision at the outset can make all the difference. 

State your decision problems carefully, acknowledge their complexity and avoid unwarranted assumptions and option-limiting prejudices.

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IDEAS

Intuitions can make very good effect on decision making. For example, when we see a person for first time, the intuition makes you build the first impression about the person which further helps in decision making involving the person.A job interview for instance, the percentage of selecting a interviewee is the combination of the performance and the intuition about the interviewee. This book gives us ways to develop our intuition and controll it and use the skill for good.

They are shortcut strategies that save time and effort by focusing our attention and simplifying the way we process information. The rules aren’t universal- they’re tailored to the particular situation and the person using them.

We use simple rules to guide decision making every day.

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