How does the 'Commitment and Consistency Bias' mentioned by Charlie Munger cause people to persist in their mistakes?

Charlie Munger's "Commitment and Consistency Bias": Why Do We Stick to Mistakes?

Charlie Munger, in his famous talk on "The Psychology of Human Misjudgment," identified Commitment and Consistency Bias as one of the key psychological factors leading to irrational decision-making. This bias refers to the phenomenon where once we publicly make a commitment or choice, we face internal and external pressures forcing our words and actions to align with it, even if the initial decision was wrong.

This bias is the core reason people "stick to a wrong path" and persist with errors. Its mechanism can be understood from the following perspectives:

---

1. Cognitive Dissonance: The Powerful Driver of Self-Justification

This is the psychological core of Commitment and Consistency Bias. When our behavior (e.g., continuing to hold a losing stock) conflicts with our cognition (e.g., "I am a smart investor"), it creates a feeling of tension and discomfort known as Cognitive Dissonance.

To eliminate this discomfort, we rarely admit, "I made a foolish decision," as this directly attacks our self-perception. Instead, we choose an easier way to resolve the conflict: changing our perception of the behavior and rationalizing the wrong action.

• Manifestations of Persisting in Error:
  • "The fundamentals of this stock haven't changed; the market just hasn't caught up yet."
  • "Although this project is currently losing money, it's a necessary investment for future success with huge potential."
  • "I'm not wrong; I'm just waiting for the right timing."

In this way, our brain repackages "persisting in error" as "staying true to conviction" or "having long-term vision," thereby preserving the core belief that "I am right," restoring internal harmony.

2. The Shackles of Public Commitment

Once we make a decision public (e.g., strongly advocating for a project in a meeting, or telling friends we are bullish on an investment), the pressure for consistency intensifies dramatically. We are not only accountable to ourselves but also need to maintain our image in the eyes of others—as someone who is consistent, decisive, and trustworthy.

• Manifestations of Persisting in Error:
  • Saving Face: Admitting error is equivalent to publicly humiliating oneself, damaging personal reputation and authority. Therefore, even if internally aware of the problem, one feels compelled to persist outwardly.
  • Path Dependence: A public stance is like a laid track; subsequent words and actions unconsciously follow this path. Changing direction requires immense willpower and courage.

Munger noted that after Max Planck discovered quantum mechanics, many older German physicists refused to accept it until their deaths because they had publicly taught and defended the old theory their entire lives. The new theory could only be fully established after "the funerals of the old guard occurred one by one."

3. Sunk Cost Fallacy

Commitment and Consistency Bias often coexists with the Sunk Cost Fallacy. Sunk costs refer to irrecoverable costs already incurred, such as time, money, or effort.

After investing significant resources into a wrong decision, abandoning it means admitting these investments were "wasted." To avoid this perceived waste, we tend to invest even more, hoping to "break even" or "revive the project."

• Manifestations of Persisting in Error:
  • Investing: "I've already lost 50% on this stock; selling now would make the loss real. I should invest more to lower my average cost and wait for it to rebound."
  • Project Management: "We've already invested millions of dollars and two years into this project. Abandoning it now would mean all that effort was wasted. We must continue."

This behavior—"investing more to justify past investments"—is a classic manifestation of Commitment and Consistency Bias: we strive to remain consistent with our past "commitment" (the costs already sunk).

4. The "Foot-in-the-Door Technique"

The power of this bias is also evident in how a small commitment can pave the way for larger, even unreasonable, commitments. Once we agree to a small request (getting a "foot in the door"), we are more likely to agree to a larger related request to maintain consistency.

• Manifestations of Persisting in Error:
  • It starts with a small, seemingly harmless concession or decision.
  • To remain consistent with this small decision, we accept a second, then a third, larger demand.
  • Ultimately, we find ourselves deeply committed, having paid a huge price for a goal that initially seemed foolish. Yet, because we've come so far, abandoning it becomes exceptionally difficult.

---

How to Counter "Commitment and Consistency Bias"?

Munger not only identified the problem but also offered solutions. Countering this bias requires deliberate rationality and discipline:

1. Invert, Always Invert:

   • Don't ask: "Should I continue doing this?"
   • Instead ask: "If I weren't already doing this today, knowing what I know now and given my current situation, would I choose to start it?"
   • This mental tool helps you break free from the shackles of sunk costs and past commitments, allowing you to examine the issue from a fresh, objective perspective.

2. Embrace the Courage to "Admit Error":

   • View admitting error as a sign of strength and wisdom, not weakness. As Keynes famously said: "When the facts change, I change my mind. What do you do, sir?"
   • In teams or organizations, foster a culture that "allows mistakes and encourages correction," rewarding those who candidly point out problems and stop losses promptly.

3. Set "Stop-Loss Points" or Conduct "Pre-Mortems":

   • Before making a major commitment (e.g., an investment or launching a project), predefine objective exit criteria. For example, "Exit unconditionally if the stock price falls below X" or "if the project fails to achieve Z metrics within Y quarters."
   • This separates future decisions from emotion and ego, making them more objective.

4. Beware the Trap of Public Declarations:

   • Avoid expressing your position too early or too firmly before thorough consideration. Leave room for flexibility.

Conclusion

"Commitment and Consistency Bias" is a powerful psychological force. It exploits our deep-seated needs for social approval, self-image, and cognitive harmony, binding us tightly to our initial decisions. It makes us sacrifice the future to preserve the past and reject truth to maintain consistency. As Munger warned, understanding and actively countering this bias is an essential step toward becoming a more rational and successful decision-maker.