This article is part of a multi-part series on human misjudgment by Phil Ordway, managing principal of Anabatic Investment Partners.
Bias from liking/dis-liking distortion including the tendency to especially like oneself, one’s own kind and one’s own idea structures, and the tendency to be especially susceptible to being misled by someone liked. Disliking distortion, bias from that, the reciprocal of liking distortion and the tendency not to learn appropriately from someone disliked.
“Well here, again, we’ve got hugely powerful tendencies, and…you can see that very brilliant people get into this almost pathological behavior. And these are very, very powerful, basic, subconscious psychological tendencies, or at least party subconscious.” –Charlie Munger
Man with a hammer syndrome revisited and B.F. Skinner: “Why is man with-a-hammer syndrome always present? Well if you stop to think about it, it’s incentive-caused bias. His professional reputation is all tied up with what he knows. He likes himself and he likes his own ideas, and he’s expressed them to other people – consistency and commitment tendency. I mean you’ve got four or five of these elementary psychological tendencies combining to create this man-with-a-hammer syndrome.”
We also can’t outsource our thinking to advisors or other helpers. “Every profession is a conspiracy against the laity” is a popular phrase that captures most of the idea, but it’s not quite right. It’s more of a subconscious psychological tendency. “The guy tells you what is good for him. He doesn’t recognize that he’s doing anything wrong…So you’re getting your advice in this world from your paid advisor with this huge load of ghastly bias. And woe to you. There are only two ways to handle it: you can hire your advisor and then just apply a windage factor, like I used to do when I was a rifle shooter. I’d just adjust for so many miles an hour wind. Or you can learn the basic elements of your advisor’s trade. You don’t have to learn very much, by the way, because if you learn just a little then you can make him explain why he’s right. And those two tendencies will take part of the warp out of the thinking you’ve tried to hire done.”
“I have never seen a management consultant’s report in my long life that didn’t end with the following paragraph: ‘What this situation really needs is more management consulting.’ Never once. I always turn to the last page. Of course, Berkshire doesn’t hire them, so I only do this on sort of a voyeuristic basis. Sometimes I’m at a non-profit where some idiot hires one.”
Also known as “Liking/Loving Tendency,” and separately, “Disliking/Hating Tendency,” with examples including:
- a newly hatched baby goose that is programmed to follow the first creature that is nice to it, even if that creature is not its mother or even a goose;
- the courtship habits of man, such that “many a courtship competition will be won by a person displaying exceptional devotion”;
- this tendency’s role as a conditioning device to make the liker/lover ignore the faults of, and comply with the wishes of, the object of his affection, and to favor anything even associated with said object;
- man’s long history of almost continuous war subverted by arrangements that direct the hatred and disliking of individuals and groups into elections – “Politics is the art of marshalling hatreds”;
- sibling rivalry and Buffett’s quip that “a major difference between rich people and poor people is that the rich people can spend their lives suing their relatives”;
- factual distortions about major events, such as the group to blame for the destruction of the World Trade Center on 9/11 – many Pakistanis blamed the Hindus, many Muslims blamed the Jews, etc.
Elsewhere Munger notes that “hating and disliking also cause miscalculation triggered by mere association. In business, I commonly see people under-appraise both the competency and morals of competitors the dislike. This is a dangerous practice, usually disguised because it occurs on a subconscious basis.” An extreme example of that many be Warren Buffett himself. Despite a record that is difficult to criticize, I often see people who dislike his politics attack his competency, his morals, or some other unrelated characteristic, and they often do so with totally irrational arguments.
About The Author: Philip Ordway
Philip Ordway is Principal and Portfolio Manager of Anabatic Fund, L.P. Previously, Philip was a partner at Chicago Fundamental Investment Partners (CFIP). At CFIP, which he joined in 2007, Philip was responsible for investments across the capital structure in various industries. Prior to joining Chicago Fundamental Investment Partners, Philip was an analyst in structured corporate finance with Citigroup Global Markets, Inc. from 2002 to 2005, where he was part of a team responsible for identifying financing solutions for companies initially in the global power and utilities group and ultimately in the global autos and industrials group. Philip earned his M.B.A. from the Kellogg School of Management at Northwestern University in 2007 and his B.S. in Education & Social Policy and Economics from Northwestern University in 2002.
More posts by Philip Ordway