Lollapalooza Tendency is the tendency to get extreme consequences from confluences of psychological tendencies acting in favor of a particular outcome. Although it is lasted last here, Munger counts it as one of the most important.
This tendency works in one of two ways:
Effects bolster each other. In the famous Milgram experiments at Stanford, test subjects devolved into terrible behavior in just a few days as a result of six tendencies being triggered at once. In Munger’s experience, when you combine two forces together, you don’t get simple addition, you get a nuclear explosion.
Effects cancel each other out. As companies grow, they get benefits (ie – economies of scale) and disadvantages (ie – beauracracy).
By understanding all of the biases and how they relate to each other, you will have a huge advantage in your life.
Source:
Michael Simmons & Ian Chew
