Throughout my study of the philosophy of decision-making, I have noticed a recurring theme among great thinkers across the centuries. They exhibit a formidable approach to decision-making. These intellectual pioneers include Aristotle, Saint Augustine, Thomas Aquinas, Rene Descartes, John Locke, Charles Darwin, Albert Einstein, Richard Feynman, and Charles Munger. I have found each great thinker built off of the idea of first principles, a method rooted in Aristotelianism.
Charles Munger takes the methodology of first principles and is able to expand it into a complex decision making methodology. Munger’s decision making method is built on the great thinkers of history, has stood the test of time, and remains effective regardless of changing circumstances. Munger emphasizes the importance of developing a latticework of mental models. This approach involves integrating knowledge transfer from various disciplines, known as a generalist viewpoint which is a multidisciplinary approaches in using relatable ideas & principles in psychology, economics, physics, biology, and more. Applying the below latticework of decision-making methods creates a meticulous approach to better understand and solve complex problems.
Charles Munger's Decision-Making Methodology
1. Interdisciplinary Learning: Knowledge Transfer
To make sound decisions, one must draw from multiple disciplines, understanding the core principles of each. This broad knowledge base allows for a more comprehensive view of any situation, as known as, knowledge transfer and holding a multidisciplinary approaches called a generalist. Click here to learn more about interdisciplinary learning.
2. Avoiding Cognitive Biases
One must Recognize and mitigate cognitive biases that can cloud judgment. Diving into common biases such as anchoring, consistency bias, and the tendency to overvalue what we cannot have. Click here to learn more about avoiding cognitive biases.
3. Checklists and Mental Models
Munger advocates for using checklists to ensure thorough consideration of all relevant factors before making decisions. These checklists help in simplifying complex issues, evaluating consequences, and grounding decisions in solid evidence. Click here to learn more about checklists and mental models.
4. Systems Thinking: a Holistic Thought Method
These processes include understanding the broader system in which a problem exists. This means considering how different parts of a system interact and the potential long-term consequences of decisions. Click here to learn more about systems thinking.
5. Probability and Outcome Assessment: Quantitative Analyst
Munger stresses the importance of considering probabilities and the range of possible outcomes, which helps in making decisions not only logical but also account for uncertainty. Click here to learn more about probability and outcome assessment.
The above summarization of the decision-making methodology are designed to help individuals think more clearly and make better decisions, both in business and in life. This decision-making latticework serves as a guide to adopting these methods while offering practical advice for improving one’s cognitive processes and decision-making abilities.
Munger, C. T. (2005). Poor Charlie's almanack: The wit and wisdom of Charles T. Munger. Expanded Third Edition. Donning Company Publishers.
Bevelin, P. (2005). Seeking wisdom: From Darwin to Munger. PCA Publications.