Sign up with Google
Module Units
- 1. Introduction
- 2. Investment In Yourself
- 3. Become A Learning Machine
- 4. Obtain Worldly Wisdom
- 5. Harnessing The Power Of Passion
- 6. The Importance Of Choosing The Right Role Models
- 7. Humility Is The Gateway To Attaining Wisdom
- 8. The Virtues Of Philanthropy And Good Karma
- 9. Simplicity Is The Ultimate Sophistication
- 10. Achieving Financial Independence
- 11. Living Life According To The Inner Scorecard
- 12. Delayed Gratification
- 13. Building Earning Power
- 14. Investing Between The Lines
- 15. Decision-Making
- 16. Checklist For The Standard Causes Of Human Misjudgment
- 17. Journaling
- 18. Power Of Incentives
- 19. Avoid Physics Envy
- 20. Intelligent Investing
- 21. The Three Most Important Words In Investing
- 22. Investing Is All About Capital Cycle
- 23. Analyzing Special Situations
- 24. The Holy Grail Of Long-Term Investing
- 25. Connecting The Dots
- 26. Market Is Not Efficient All Time
- 27. The Dynamic Art Of Portfolio Management
- 28. To Finish First, You Must First Finish
- 29. Read More History And Fewer Forecasts
- 30. Updating Your Beliefs In Light of New Evidence
- 31. Opportunity Costs
- 32. Pattern Recognition
- 33. Role of Luck, Chance, Serendipity, And Randomness
- 34. Value Investor
- 35. Conclusion
Power Of Incentives
One should never underestimate the Power of Incentives.
This demonstrates how the interaction of multiple behavioral biases leads to extreme, irrational outcomes. Financial incentives include prestige, freedom, time, titles, power, and admiration. All of these are strong inducements.
According to Munger, few forces are more powerful, than incentives:
"Anytime you create large differences in commissions where the guy gets X percent for selling A, which is some mundane security, and ten times X for selling B, which is something toxic, you know what's going to happen."
Because incentive-caused bias occurs automatically and subconsciously, you may be led to believe that what is good for you is also suitable for the client.
Copy the URL
Leaderboard
| # | Name | Score |
|---|
