Munger Models: Confirmation Bias

"What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact.” - Warren Buffet

Confirmation bias is our tendency to support and seek supporting evidence for whatever we already believe. A detailed explanation can be found here.

In this post, I want to draw attention to a particularly dangerous group of confirmation biases - those regarding things that have been true. Evidence from the past support these erstwhile truths, but new environments and new technologies could obviate them or make them irrelevant.

The rise and fall of empires and enterprises throughout history demonstrates the outsized impact that this type of confirmation bias could have:

• The Ming empire between 1405 and 1433 sent forth seven fleets to distant lands and determined that there was no greater power in the world than China. This was likely true at the time, but was no longer the case by the time of the opium wars in the mid-19th century.
• Japan had a similar experience with the arrival of Commodore Perry and the fall of the Tokugawa shogunate, ending over two centuries of self-imposed isolation.
• Kodak invented the digital camera in 1975, but dropped the product due to fears that it might threaten its photographic film business. By 2012, it had filed for bankruptcy as iPhones ate its lunch.
• Yahoo was the most popular website globally in 2000 and was by far the most valuable Internet company in the late 1990's. In 2017, it ceased to exist as an independent company.

We cannot predict the future. However, we can be certain that it will be different from now, and almost certain that it will be better than now. The question, then, is: "What will change?"

I think it's worthwhile to consider broad categories and formulate the most radical hypotheses we can think of. I've shared some of my attempts below.

Government

Winston Churchill once said: "Democracy is the worst form of government - except for all the others that have been tried." Is it possible that we will soon see a clearly better alternative to government of the people, for the people, by the people?

Education

Most people would agree that attending a good university is a key component of one's education. Is it possible that in the coming decade, attending university will go out of fashion as it no longer has a positive return on investment?

Geopolitics

China's economy is expected to overtake the United States' over the next decade. Its much larger population is a significant advantage. Historically, however, technology has been a better predictor of a country's economy and global influence than population. Is it possible that America's renewed interest in space exploration technologies will change the equation for the geopolitical balance of power going forward?

Urbanization

The past few decades has seen unprecedented migration to global megacities, especially to Asian ones such as Tokyo and Shanghai. However, is it possible that new technologies such as super-fast intercity transport and satellite Internet will trigger a reversal of the urbanization trend?

Agriculture

Joaquin Phoenix famously spoke in his Oscar acceptance speech earlier this year about how raising farm animals for consumption is unethical. Will we someday live in a world with no farm animals and much fewer acreage devoted to farms?

E-commerce and physical retail

Shopping online seems to have defeated shopping offline, but is there a scenario where e-commerce dies while retail survives? There might be - if neighborhood 3D printers that can make any product to order become a reality. Value would then reside in designs and in physical demonstrations of the product.

Mobile Internet

Mobile phones are now the dominant devices for people to access the web every day. Is it possible that mobile phones will soon go the way of increasingly irrelevant technologies such as digital cameras and PCs, to be replaced by nascent form factors such as wearables and public screen terminals?