Holding onto old ideas and the reluctance to face changes in our prior-held beliefs can harm us
31-Aug-2015 •Mohammed Ekramul Haque
What is it? This is the tendency of humans to be reluctant to change anything that is inconsistent with their prior-held beliefs. Says Munger, "Lord Keynes pointed out, it was not the intrinsic difficulty of new ideas that prevented their acceptance. Instead, the new ideas were not accepted because they were inconsistent with old ideas in place. What Keynes was reporting is that the human mind works a lot like the human egg. When one sperm gets into a human egg, there's an automatic shut-off device that bars any other sperm from getting in. The human mind tends strongly toward the same sort of result.
And so, people tend to accumulate large mental holdings of fixed conclusions and attitudes that are not often reexamined or changed, even though there is plenty of good evidence that they are wrong."
This tendency comes in our way of changing bad habits. "Few people can list a lot of bad habits that they have eliminated, and some people cannot identify even one of these. Practically everyone has a great many bad habits he has long maintained despite their being known as bad. Given this situation, it is not too much in many cases to appraise early-formed habits as destiny. When Marley's miserable ghost says, "I wear the chains I forged in life," he is talking about chains of habit that were too light to be felt before they became too strong to be broken."
So strong is the hold of the inconsistency-avoidance tendency that many individuals will not change their ideas, views or habits long after necessary. "It is easy to see that a quickly reached conclusion, triggered by the doubt-avoidance tendency, when combined with a tendency to resist any change in that conclusion, will naturally cause a lot of errors in cognition for the modern man. And so it observably works out. We all deal much with others whom we correctly diagnose as imprisoned in poor conclusions that are maintained by mental habits they formed early and will carry to their graves."
How to protect yourself from this tendency? Search out for views that go against your own, evaluate whether your prior held views still hold ground. This is what Charles Darwin used to weed out inconsistency-avoidance tendency. Says Munger, "One of the most successful users of an antidote to first conclusion bias was Charles Darwin. He trained himself, early, to intensively consider any evidence tending to disconfirm any hypothesis of his, more so if he thought his hypothesis was a particularly good one."
Often found in: When confronted with a new reality
In Life: Courts have had to resort to strategies to tackle this tendency. "Before making decisions, judges and juries are required to hear long and skillful presentations of evidence and argument from the side they will not naturally favor, given their ideas in place. And this helps prevent considerable bad thinking from the "first conclusion bias.""
In corporations: Many corporations that are aware of the inconsistency-avoidance tendency form groups to take in counter arguments before taking a decision. Think of test groups that companies employ before taking their products public. Views from such groups are then considered to find out the changes needed before a market launch.
In investing: There was an old folklore among Indian investors. Investors of our father's generation used to lap up anything that Dhirubhai Ambani offered. The thinking used to go like this: Invest with Reliance to build wealth for your child's education or marriage. Any investor buying Reliance with that belief in the last five years would have seen his investment actually decline 12 per cent, even though the Sensex went up 77 per cent during the same time.
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.