By Charlie Munger’s Almanack
“Some seller of an ordinary industrial product will often change his product’s trade dress and raise its price significantly hoping that quality-seeking buyers will be tricked into becoming purchasers by mere association of his product and its high price.” (p. 470)
“Some of the most important miscalculations come from what is accidentally associated with one’s past success, or one’s liking and loving, or one’s disliking and hating, which includes a natural hatred for bad news.” (p. 470)
“For instance, a man foolishly gambles in a casino and yet wins. This unlikely correlation causes him to try the casino again, or again and again, to his horrid detriment. Or a man gets lucky in an odds-against venture headed by an untalented friend. So influenced, he tries again what worked before- with terrible results” (p. 470)
Persian Messenger Syndrome- “Another common bad effect from mere association of a person and a hated outcome is displayed in Persian Messenger Syndrome. Ancient Persians actually killed some messengers whose sole fault was that they brought home truthful bad news” (p. 471)
CBS in their prime was affected by Persian Messenger Syndrome. “Chairman Paley was hostile to people who brought him bad news. The result was that Paley lived in a cocoon of unreality, from which he made one bad deal after another, even exchanging a large share of CBS for a company that had to be liquidated shorty thereafter.” (p. 472)
“At Berkshire, there is a common injunction: Always tell us the bad news promptly. It is only the good news that can wait. It also helps to be so wise and informed that people fear not telling you bad news because you are so likely to get it elsewhere.” (p. 472)