It’s counterproductive for a prey animal that is threatened by a predator to take a long time in deciding what to do.Charlie Munger, Poor Charlie’s Almanack, 2005
Psychologist and economist Daniel Kahneman in his huge hit “Thinking, Fast and Slow” considers doubt-avoidance tendency to be a System 1 activity.
System 1 is your experiential system. It’s fast. It’s quick. It’s automatic and really difficult to control. System 2 is your analytical system: slow, purposeful, deliberate, but malleable – where reason dominates.
Kahneman says “System 1 is…more influential…guiding…[and]…steering System 2 to a very large extent.”
When it comes to investing, avoiding doubt can get a person into serious trouble.
One example is the people who thought, “Why investigate an asset manager like Bernard Madoff when avoiding doubt is so much easier? After all, he managed money for many important people. Surely they looked carefully into his operations and background.”
The confidence of entrepreneurs bolstered by doubt-avoidance tendency creates positive benefits for society in the aggregate by generating productivity and genuine growth in the economy, even if legions of entrepreneurs may fail.
“Most of you will fail, get disrespected, impoverished, but we are grateful for the risks you’re taking and the sacrifices you’re making for the sake of the economic growth of the planet and pulling others out of poverty. You’re the source of our antifragility. Our nation thanks you.”
~ Nassim Taleb