The Lollapalooza Scam

Lollapalooza Scam

In his legendary 1995 Harvard lecture, “The Psychology of Human Misjudgment,” Charlie Munger, famed financier, polymath and co-chair of Berkshire Hathaway, listed no less than twenty-five cognitive biases that distort our thinking and introduced the Lollapalooza.

Q2 2020 hedge fund letters, conferences and more

The Lollapalooza!

The exponential result when combined effects of cognitive biases potentiate each other.

So the whole is far greater than the parts.

Think of market bubbles and crashes.

Fads and manias.

As in “Extraordinary Popular Delusions and the Madness of Crowds” by Charles Mackay (1841).

Harmless Lollapaloozas

Lollapaloozas can be silly and benign.

Was anyone harmed by the hula hoop or yo-yo crazes of the 1950s?

(Who would be caught dead today with a hula hoop or yo-yo?)

Beanie babies?

Troll dolls?

Pet rocks?

Now, really.

Artistic Lollapaloozas

Lollapaloozas can be joyous, musical and enduring:

Sinatra, Elvis and the Beatles.

Bach, Mozart and Beethoven.

All of whom we loved

And loved us back.

For all time.

Mixed Lollapalooza

Of course, the Lollapalooza can be a mixed blessing:

We cling to our smartphones.

In some surveys more dear than a spouse!

Do smartphones enhance or degrade human relations?

An open question.

Malignant Lollapaloozas

But there are malignant Lollapaloozas.

Lynchings, massacres, wars of conquest.

Communism.

Nazism.

And dark, criminal, personal Lollapaloozas:

Lollapalooza Scams!

Scammed patients come to my psychiatric office.

Pre-scam, mid-scam, post-scam.

The story is the same or similar.

Frantic call from a relative incarcerated in a foreign jail.

Desperate, brief and too muffled to be clearly identified.

“Help me, Grandma!

Don’t tell my parents!

My attorney will call you!”

The “attorney” and “associates” call in turn.

“Wire $5,000.00 immediately!”

What will Grandma do?

No less than eight biases direct from Charlie’s list of 25 impel Grandma to pay the scammers.

1) Bias From Liking Distortion

Whom do we love more than our grandchildren?

2) Bias From Deprival Super-Reaction Syndrome

Pain of loss: ”My grandchild may die or worse in a foreign prison!”

3) Bias From Social Proof

Your “grandchild,” the “attorney” and the “associates” all insist you pay the “fee.”

You have been warned not to consult your best and most devoted counsel: your adult child.

(One victim had a cheerleading aide!)

4) Bias From Consistency And Commitment Tendency

Once you take any step to comply, you commit to payment.

“It is easier to fool people than to convince them they have been fooled.”—Mark Twain

5) Bias From Authority Figures

An authority figure, an “attorney,” said, “Pay to free your grandchild.”

6) Bias From Stress-Influence Tendency

What is more stressful than a grandchild at maximal risk?

7) Bias From Doubt-Avoidance Tendency

Any pause to doubt might endanger your grandchild.

8) Bias From Senescence-Misinfluence Tendency

The natural loss of skills and abilities with age.

Scammers and muggers prey upon the elderly.

Many Succumb

Many of my patients who were targeted, unfortunately, succumbed.

Even the smart and sophisticated.

Experience beats intelligence most of the time.

I was able to interrupt one ongoing scam between the first and second payment.

I telephoned the real-life granddaughter over the patient’s objection, breaking HIPAA for an emergency.

The real granddaughter was safe at home, asleep in her bed.

To Grandma’s relief.

And profound shame.

The shame of the scammed.

Never spoke of it again.

The Power of Love

A scam I could not thwart was prevented by my kind and generous office manager.

The super-power of a good woman’s heartfelt plea:

“Don’t do it! This happened to my best friend!”

Testifying In Court

I was a lone witness under the penetrating glare of a seasoned scammer.

Conscienceless and remorseless.

With highly competent counsel.

Caught bilking an elderly widow.

Other witnesses declined to come forth.

The case concluded with mere sanctions.

The Unfortunate Take-Away

A criminal defense attorney, now long dead, once advised me, unsolicited:

“If you’re gonna steal, steal big.”

That should not be good advice.

But it is.

Scammers steal big and are rarely caught.

Often calling from offshore, beyond the reach of law enforcement.

Victims shamed and helpless.

A silent pandemic.

If you have read this, you are now immunized.

Thank Charlie.

 

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