The Psychology of Human Misjudgment
Charlie Munger · 1995
"The human brain relies on roughly two dozen hardwired psychological tendencies that, while evolutionarily useful in isolation, routinely combine to cause catastrophic misjudgment in modern, complex environments."
Your brain didn't evolve to allocate capital or run a company — it evolved to survive in small groups. So it leans on shortcuts: trust what authority figures say, do what everyone else is doing, avoid looking inconsistent, react strongly to reward and punishment. Any one of these misfiring is a minor error. But Charlie Munger noticed they rarely fire alone — when three or four line up in the same direction at once, they compound into something far worse than the sum of their parts. He called this the Lollapalooza Effect, and it's the mechanism behind everything from market manias to cult recruitment to a stranger talking you into a bad deal.
Read more about the topic
The Institutional Imperative
"Corporate behavior is driven largely by an invisible, gravitational force that causes otherwise rational managers to mindlessly imitate peers, resist change, and deploy capital foolishly to satisfy their own egos."