How quick decisions taken to avoid doubt can backfire because it may not always be rational or objective
28-Aug-2015 •Mohammed Ekramul Haque
What is it? Many of us rush to a decision so that any doubts we have about the decision are quickly eliminated. The decision taken under the influence of the doubt-avoidance tendency may not always be rational or objective. Says Munger, "The brain of a man is programmed with a tendency to quickly remove doubt by reaching some decision."
Like the dislike/hate tendency, Munger views this tendency as an ancient make-up that been a part of evolution. "It is easy to see how evolution would make animals, over the eons, drift toward such quick elimination of doubt. After all, the one thing that is surely counterproductive for a prey animal that is threatened by a predator is to take a long time in deciding what to do. And so man's doubt-avoidance tendency is quite consistent with the history of his ancient, nonhuman ancestors." You could also think of this tendency as a survival tactic.
What triggers the doubt-avoidance tendency? "Well, an unthreatened man, thinking of nothing in particular, is not being prompted to remove doubt through rushing to some decision. What usually triggers the doubt-avoidance tendency is some combination of (l) puzzlement and (2) stress. And both of these factors naturally occur in facing religious issues. Thus, the natural state of most men is in some form of religion. And this is what we observe."
Often found in: Process of making quick decisions.
In Life: Not only ordinary citizens but persons in responsible places like judges and jurors too are susceptible to this tendency. How does one then overcome this tendency? Munger says, "So pronounced is the tendency in a man to quickly remove doubt by reaching some decision that behavior to counter the tendency is required from judges and jurors. Here, delay before decision making is forced. And one is required to so comport himself, prior to conclusion time, so that he is wearing a "mask" of objectivity. And the "mask" works to help real objectivity along."
In investing: The doubt-avoidance tendency is most visible usually in the thick of a bull run, when new investors who have been late to the party invest at the drop of a hat, without any research and analysis. Everyone seems to be in a hurry to make gains. The whole country seems to be in the grip of buying on impulse, helped in a large effect by the increased usage of smartphones. Many investors click 'buy' on stocks as if they shop for clothes or household items. We need to guard ourselves against such behaviour.
You just read about one of the misjudgements people generally make while investing. Read 25 ways to (Not) make mistakes to get an account of Charlie Munger's twenty-five typical misjudgements, along with our commentary on how they fit into Indian businesses and Indian investments.