The Pitfall of Commitment Bias in Financial Decisions

This chapter explores how commitment and consistency bias can impact financial decision-making, causing individuals to stick to losing investments. It emphasizes the importance of recognizing this psychological trap to make more rational and informed choices amidst changing circumstances.

Transcript

chevron_right

Play full episode

chevron_right

Transcript

Episode notes

On today’s episode, Clay is joined by Dr. Robert Cialdini to discuss Charlie Munger’s favorite book – Influence: The Psychology of Persuasion.

Dr. Cialdini is a New York Times Best Selling Author of Influence and Pre-Suasion.

He is also CEO and President of Influence at Work where they focus on ethical training, corporate keynote program, and the Cialdini Method Certified Trainer program. He received his PhD from the University of North Carolina and post-doctoral from Columbia University. In acknowledgment of his outstanding research achievements and contributions in behavioral science, he is frequently regarded as the “Godfather of Influence.”

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro

01:53 - The story of what led Charlie Munger to give a Berkshire A share to Dr. Cialdini.

03:57 - How Buffett and Munger use reciprocity to enrich the world and themselves.

10:36 - What Cialdini learned in his personal interactions with Munger.

18:55 - How the commitment & consistency bias can affect us as investors.

23:04 - How we can utilize the principles of Influence in an honest and ethical way.

26:28 - Why trust is at the foundation of all great business relationships.

40:23 - Why the principle of scarcity is so powerful even in a world full of abundance.

58:54 - How we can guard ourselves against the liking bias when assessing management.

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, Kyle, and the other community members.
Check out Influence at Work & the Cialdini Institute.
Dr. Cialdini’s books: Influence, Pre-Suasion, Yes!: 50 Scientifically Proven Ways to Be Persuasive
Related Episode: MI091: Warren Buffett’s #3 & Charlie Mungers #1 Business Book Of All-time w/ Robert Cialdini | YouTube Video
Related Episode: TIP022: Influence – Robert Cialdini’s Psychology Of Persuasion w/ Preston & Stig | YouTube Video
Follow Robert on Twitter.
Follow Clay on Twitter.
Check out all the books mentioned and discussed in our podcast episodes here.

NEW TO THE SHOW?

Follow our official social media accounts: X (Twitter) | LinkedIn | Instagram | Facebook | TikTok.
Check out our We Study Billionaires Starter Packs.
Browse through all our episodes (complete with transcripts) here.
Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool.
Enjoy exclusive perks from our favorite Apps and Services.
Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets.
Learn how to better start, manage, and grow your business with the best business podcasts.

SPONSORS

Support our free podcast by supporting our sponsors:

River
Toyota
Range Rover
Fundrise
AT&T
The Bitcoin Way
USPS
American Express
Onramp
SimpleMining
Public
Vacasa
Shopify

HELP US OUT!

Help us reach new listeners by leaving us a rating and review on Apple Podcasts! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it!

Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Learn more about your ad choices. Visit megaphone.fm/adchoices

Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

Remember Everything You Learn from Podcasts

Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.

Get the app

Home Top podcasts Popular guests