Monday, June 23, 2014

Human nature and "incentive-caused bias"...

So, I'm reading this longish essay by Charlie Munger titled "The Psychology of Human Misjudgment."   If you have been paying attention for the past twenty-five years (or if you follow the link), you know that Charlie Munger is worth paying attention to.  Anyway, this interesting passage caught my eye:

     "Now there are huge implications from the fact that the human mind is put together this way.  One implication is that people who create things like cash registers, which make dishonest behavior hard to accomplish, are some of the effective saints of our civilization because, as Skinner so well knew, bad behavior is intensely habit-forming when it is rewarded.
     "And so the cash register was a great moral instrument when it was created.  And, by the way, Patterson, the great evangelist of the cash register, knew that by his own experience.  He had a little store, and his employees were stealing him blind, so that he never made any money.  Then people sold him a couple of cash registers, and his store went to profit immediately.  He promptly closed the store and went into the cash register business, creating what became the mighty National Cash Register Company, one of the glories of its time.  "Repeat behavior that works" is a behavior guide that really succeeded for Patterson, after he applied one added twist.  And so did high moral cognition.  An eccentric, inveterate do-gooder (except when destroying competitors, all of which he regarded as would-be patent thieves), Patterson, like Carnegie, pretty well gave away all his money to charity before he died, always pointing out that 'shrouds have no pockets.'  So great was the contribution of Patterson's cash register to civilization, and so effectively did he improve the cash register and spread its use, that in the end, he probably deserved the epitaph chosen for the Roman poet Horace:  'I did not completely die.'"

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