Psychology

Question 1

Circle of competence

Answer 1

Know what you don’t know and leverage others to move on

Question 2

Risk/reward

Answer 2

Up/down ratio

Question 3

Incentives

Answer 3

What to give to get what you want and how to align incentives?

Question 4

Evolution

Answer 4

Caveman syndrome

Question 5

Outside view

Answer 5

Your perception (or fundamentals) vs others (markets, others or outside view)

Question 6

Pre-Mortem

Answer 6

Assume failure and understand it

Question 7

Value of reputation / brands

Answer 7

The most valuable and easiest to destroy, power of brands, cannot be easily recreated with any capital

Question 8

Agency costs

Answer 8

Incentives bias, granny’s rule of eating carrots before sweets

Question 9

Living/loving

Answer 9

Attachment and mistake ignorance, but also a joy of being loved and pestered

Question 10

Disliking/hating

Answer 10

Reverse of loving/liking

Question 11

Doubt avoidance

Answer 11

Driven by puzzlement and stress avoidance

Question 12

Inconsistency bias

Answer 12

Status who, change residence

Question 13

Curiosity

Answer 13

Progress driver after formal education is over

Question 14

Kantian fairness

Answer 14

Courtesy driving modern societies

Question 15

Envy/jealousy tendency

Answer 15

And it’s a taboo to say it openly

Question 16

Reciprocation

Answer 16

Small ask more successful after a big failed ask, giveaways/steps, negative reciprocity best combatted by postponing

Question 17

Influence of a mere association

Answer 17

Trend not for all individual cases, bad messenger syndrome, radical open mindedness

Question 18

Pain avoidance

Answer 18

Avoiding and not seeing unpleasantries

Question 19

Excess self regard

Answer 19

Loss of objectivity about yourself surrounding people and things

Question 20

Overoptimism

Answer 20

Think in probabilities

Question 21

Deprivation superreaction

Answer 21

Especially when just received a reward (consider it similarly owned as if long term)

Question 22

Contrast misreaction

Answer 22

Small leak in a boat will sink it. Low end powerful disruption

Question 23

Stress influence

Answer 23

Too much stress leads to a break, a bit of stress leads to outperformance, those tough to break once broken are much harder to revert

Question 24

Availability bias

Answer 24

Something isn’t superior because it’s easily available

Question 25

Use it or lose it

Answer 25

Sharpening the saw

Question 26

Drug abuse

Answer 26

Avoiding large negative optionality

Question 27

Senescence effect

Answer 27

Massive NPV by getting hard things done early in life vs preference for short term gains

Question 28

Authority misinfluence

Answer 28

Boss may not be objective, don’t lose objectivity/opinion based on hierarchy / when boss is watching

Question 29

Empty talk

Answer 29

Just don’t

Question 30

Reason respecting

Answer 30

Give “WHY” to have followers even for filling decisions

Question 31

Loollapalooza

Answer 31

Confluence

Question 32

False precision

Answer 32

Don’t be fooled by made up numbers

Question 33

Reverse thinking

Answer 33

Reverse the flow of thinking to prove that the opposite is true or false to tackle hard questions

Question 34

Creative destruction

Answer 34

Getting to the next level by destroying and recreating (Netflix DVD)

Question 35

Gamblers fallacy

Answer 35

Belief that future probabilities depend on past outcomes

Question 36

Winners curse

Answer 36

Winner in an auction overpays and often is the loser (Comcast unless winner specific synergies)

Question 37

Disposition effect

Answer 37

Selling winners and keeping losers instead of reverse

Question 38

Loss aversion

Answer 38

Sub-optimal risk taking based on biases

Question 39

Probabilities

Answer 39

Positive and negative optionality (3:2 payout with 1:1 odds)

Question 40

Base rate neglect

Answer 40

What base rate will give the effect and whether it’s sensible

Question 41

Reversion to mean

Answer 41

Normalisation, cyclicality unless the pattern breaks

Question 42

Law of big numbers

Answer 42

In large samples expect normal distribution

Question 43

Bell curve

Answer 43

70% of outcomes within one standard deviation, 95% in 2 sigma and 99% in 3 sigma

Question 44

Causality vs correlation

Answer 44

Is the effect purely statistical?

Question 45

Extremes

Answer 45

Testing on extreme to get the best insight

Question 46

Travel & arrive

Answer 46

Buddha said it’s best to travel well than to arrive (sell the news given how much is priced in during the travel)

Question 47

Misconception of chance (law of small vs large numbers & gambler’s fallacy)

Answer 47

If it’s a chance outcome (you cannot lose on purpose) the probabilities are independent from each other, not influenced by past pattern and do not extrapolate / explain in small samples

Question 48

Power of irrational belief

Answer 48

If you think you can you can, if you think you can’t you can’t

Question 49

Signalling types

Answer 49

- actual (teal or fake - B. Mimicry) - Bayesian mimicry (pretending you’re possess something you don’t) - oversignalling (negative - insecure, desperate) - countersignalling (signalling the opposite as you don’t have to prove/signal)