Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions

Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions

by Dan Ariely

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Overview

Why do our headaches persist after we take a one-cent aspirin but disappear when we take a fifty-cent aspirin?

Why do we splurge on a lavish meal but cut coupons to save twenty-five cents on a can of soup?

When it comes to making decisions in our lives, we think we're making smart, rational choices. But are we?

In this newly revised and expanded edition of the groundbreaking New York Times bestseller, Dan Ariely refutes the common assumption that we behave in fundamentally rational ways. From drinking coffee to losing weight, from buying a car to choosing a romantic partner, we consistently overpay, underestimate, and procrastinate. Yet these misguided behaviors are neither random nor senseless. They're systematic and predictable–making us predictably irrational.

Product Details

ISBN-13: 9780061353246
Publisher: HarperCollins Publishers
Publication date: 04/27/2010
Edition description: Expanded
Pages: 349
Sales rank: 30,198
Product dimensions: 5.20(w) x 7.90(h) x 1.00(d)

About the Author

Dan Ariely is the bestselling author of Predictably Irrational, The Upside of Irrationality, and The (Honest) Truth About Dishonesty. He is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University and is the founder of the Center for Advanced Hindsight. His work has been featured in the New York Times, the Wall Street Journal, the Washington Post, the Boston Globe, and elsewhere. He lives in North Carolina with his family.

Read an Excerpt

Predictably Irrational
The Hidden Forces That Shape Our Decisions

Chapter One

The Truth about Relativity

Why Everything Is Relative—Even When It Shouldn't Be

One day while browsing the World Wide Web (obviously for work—not just wasting time), I stumbled on the following ad, on the Web site of a magazine, the Economist.

I read these offers one at a time. The first offer—the Internet subscription for $59—seemed reasonable. The second option—the $125 print subscription—seemed a bit expensive, but still reasonable.

But then I read the third option: a print and Internet subscription for $125. I read it twice before my eye ran back to the previous options. Who would want to buy the print option alone, I wondered, when both the Internet and the print subscriptions were offered for the same price? Now, the print-only option may have been a typographical error, but I suspect that the clever people at the Economist's London offices (and they are clever—and quite mischievous in a British sort of way) were actually manipulating me. I am pretty certain that they wanted me to skip the Internet-only option (which they assumed would be my choice, since I was reading the advertisement on the Web) and jump to the more expensive option: Internet and print.

But how could they manipulate me? I suspect it's because the Economist's marketing wizards (and I could just picture them in their school ties and blazers) knew something important about human behavior: humans rarely choose things in absolute terms. We don't have an internal value meter that tells us howmuch things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly. (For instance, we don't know how much a six-cylinder car is worth, but we can assume it's more expensive than the four-cylinder model.)

In the case of the Economist, I may not have known whether the Internet-only subscription at $59 was a better deal than the print-only option at $125. But I certainly knew that the print-and-Internet option for $125 was better than the print-only option at $125. In fact, you could reasonably deduce that in the combination package, the Internet subscription is free! "It's a bloody steal—go for it, governor!" I could almost hear them shout from the riverbanks of the Thames. And I have to admit, if I had been inclined to subscribe I probably would have taken the package deal myself. (Later, when I tested the offer on a large number of participants, the vast majority preferred the Internet-and-print deal.)

So what was going on here? Let me start with a fundamental observation: most people don't know what they want unless they see it in context. We don't know what kind of racing bike we want—until we see a champ in the Tour de France ratcheting the gears on a particular model. We don't know what kind of speaker system we like—until we hear a set of speakers that sounds better than the previous one. We don't even know what we want to do with our lives—until we find a relative or a friend who is doing just what we think we should be doing. Everything is relative, and that's the point. Like an airplane pilot landing in the dark, we want runway lights on either side of us, guiding us to the place where we can touch down our wheels.

In the case of the Economist, the decision between the Internet-only and print-only options would take a bit of thinking. Thinking is difficult and sometimes unpleasant. So the Economist's marketers offered us a no-brainer: relative to the print-only option, the print-and-Internet option looks clearly superior.

The geniuses at the Economist aren't the only ones who understand the importance of relativity. Take Sam, the television salesman. He plays the same general type of trick on us when he decides which televisions to put together on display:

36-inch Panasonic for $690
42-inch Toshiba for $850
50-inch Philips for $1,480

Which one would you choose? In this case, Sam knows that customers find it difficult to compute the value of different options. (Who really knows if the Panasonic at $690 is a better deal than the Philips at $1,480?) But Sam also knows that given three choices, most people will take the middle choice (as in landing your plane between the runway lights). So guess which television Sam prices as the middle option? That's right—the one he wants to sell!

Of course, Sam is not alone in his cleverness. The New York Times ran a story recently about Gregg Rapp, a restaurant consultant, who gets paid to work out the pricing for menus. He knows, for instance, how lamb sold this year as opposed to last year; whether lamb did better paired with squash or with risotto; and whether orders decreased when the price of the main course was hiked from $39 to $41.

One thing Rapp has learned is that high-priced entrées on the menu boost revenue for the restaurant—even if no one buys them. Why? Because even though people generally won't buy the most expensive dish on the menu, they will order the second most expensive dish. Thus, by creating an expensive dish, a restaurateur can lure customers into ordering the second most expensive choice (which can be cleverly engineered to deliver a higher profit margin).1

So let's run through the Economist's sleight of hand in slow motion.

As you recall, the choices were:

1. Internet-only subscription for $59.
2. Print-only subscription for $125.
3. Print-and-Internet subscription for $125.

When I gave these options to 100 students at MIT's Sloan School of Management, they opted as follows:

1. Internet-only subscription for $59—16 students
2. Print-only subscription for $125—zero students
3. Print-and-Internet subscription for $125—84 students

Predictably Irrational
The Hidden Forces That Shape Our Decisions
. Copyright © by Dan Ariely. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.

Table of Contents

Introduction: How an Injury Led Me to Irrationality and to the Research Described Here xi

Chapter 1 The Truth about Relativity: Why Everything Is Relative—Even When It Shouldn't Be 1

Chapter 2 The Fallacy of Supply and Demand: Why the Price of Pearls—and Everything Else—Is Up in the Air 25

Chapter 3 The Cost of Zero Cost: Why We Often Pay Too Much When We Pay Nothing 55

Chapter 4 The Cost of Social Norms: Why We Are Happy to Do Things, but Not When We Are Paid to Do Them 75

Chapter 5 The Power of a Free Cookie: How free Can Make Us Less Selfish 103

Chapter 6 The Influence of Arousal: Why Hot Is Much Hotter Than We Realize 119

Chapter 7 The Problem of Procrastination and Self-Control: Why We Can't Make Ourselves Do What We Want to Do 139

Chapter 8 The High Price of Ownership: Why We Overvalue What We Have 167

Chapter 9 Keeping Doors Open: Why Options Distract Us from Our Main Objective 183

Chapter 10 The Effect of Expectations: Why the Mind Gets What It Expects 199

Chapter 11 The Power of Price: Why a 50-Cent Aspirin Can Do What a Penny Aspirin Can't 225

Chapter 12 The Cycle of Distrust: Why We Don't Believe What Marketers Tell Us 251

Chapter 13 The Context of Our Character, Part I: Why We Are Dishonest, and What We Can Do about It 271

Chapter 14 The Context of Our Character, Part II: Why Dealing with Cash Makes Us More Honest 295

Chapter 15 Beer and Free Lunches: What Is Behavioral Economics, and Where Are the Free Lunches? 309

Thanks 323

List of Collaborators 327

Notes 335

Bibliography and Additional Readings 339

What People are Saying About This

Nassim Nicholas Taleb

“This is a wonderful, eye-opening book. Deep, readable, and providing refreshing evidence that there are domains and situations in which material incentives work in unexpected ways. We humans are humans, with qualities that can be destroyed by the introduction of economic gains. A must read!”

James Surowiecki

"Dan Ariely is a genius at understanding human behavior: no economist does a better job of uncovering and explaining the hidden reasons for the weird ways we act, in the marketplace and out. Predictably Irrational will reshape the way you see the world, and yourself, for good."--(James Surowiecki, author of The Wisdom of Crowds)

Nicholas Negroponte

“After reading this book, you will understand the decisions you make in an entirely new way.”

Chip Heath

“Freakonomics held that people respond to incentives, perhaps in undesirable ways, but always rationally. Dan Ariely shows you how people are deeply irrational, and predictably so.”

Jerome Groopman

"A marvelous book that is both thought-provoking and highly entertaining, ranging from the power of placebos to the pleasures of Pepsi. Ariely unmasks the subtle but powerful tricks that our minds play on us, and shows us how we can prevent being fooled."--(Jerome Groopman, Recanati Chair of Medicine, Harvard Medical School, and New York Times bestselling author of How Doctors Think)

Kenneth Arrow

“Dan Ariely’s ingenious experiments explore deeply how our economic behavior is influenced by irrational forces and social norms. In a charmingly informal style that makes it accessible to a wide audience, PREDICTABLY IRRATIONAL provides a standing criticism to the explanatory power of rational egotistic choice.”

George Akerlof

"Predictably Irrational is wildly original. It shows why-much more often than we usually care to admit-humans make foolish, and sometimes disastrous, mistakes. Ariely not only gives us a great read; he also makes us much wiser."--(George Akerlof, 2001 Nobel Laureate in Economics, Koshland Professor of Economics, University of California at Berkeley)

Daniel Gilbert

"Filled with clever experiments, engaging ideas, and delightful anecdotes. Dan Ariely is a wise and amusing guide to the foibles, errors, and bloopers of everyday decision making."--(Daniel Gilbert, Professor of Psychology, Harvard University, and New York Times bestselling author of Stumbling on Happiness)

Paul Slovic

“Predictably Irrational is clever, playful,humorous, hard hitting, insightful, and consistently fun and exciting to read.”

Daniel McFadden

"This is going to be the most influential, talked-about book in years. It is so full of dazzling insights-and so engaging-that once I started reading, I couldn't put it down."--(Daniel McFadden, 2000 Nobel Laureate in Economics, Morris Cox Professor of Economics, University of California at Berkeley)

Charles Schwab

"The most difficult part of investing is managing your emotions. Dan explains why that is so challenging for all of us, and how recognizing your built-in biases can help you avoid common mistakes."--(Charles Schwab, Chairman and CEO, The Charles Schwab Corporation)

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Predictably Irrational: The Hidden Forces That Shape Our Decisions 3.8 out of 5 based on 0 ratings. 223 reviews.
Guest More than 1 year ago
¿Do you know why we so often promise ourselves to diet, only to have the thought vanish when the desert cart rolls by?¿ This question is one of several asked by Dan Ariely in the introduction of his recent book ¿Predictably Irrational.¿ He subsequently states that ¿¿By the end of the book, you¿ll know the answers to these and many other questions that have implications for your personal life, for your business life, and for the way you look at the world.¿ An equally tantalizing statement follows in which the author describes how a set of events in his childhood cemented a life perspective that is quite different from 'and presumably more insightful than' your average person. Together, these preliminary contents set the tone for some high expectations. What follows, however, is a mildly interesting, sometimes trite, and often oversimplified set of observations and `clever¿ experiments that come across more as products of extensive free time than brainchildren of a truly deep thinker. While some disappointment stems from the ambitious prologue, a rudimentary problem with Ariely¿s thesis lies in the set-up. He starts early with a summarized definition of classical economics, which surmises that we are all rational and, in every day life, compute the value of all options we face and then select the one that maximizes our gain. Any action we take that is not in our best economic interest, therefore, is irrational, and as Ariely opines, surprising in its very nature. But while rational behavior of participating agents may be the basis of economic theory, very few people spend any time thinking about this theory other than economists. For the rest of us, there is no question and certainly no surprise that our social and economic behavior can be irrational, and we have countless reminders of this every day. We know that too many options can diminish returns 'chapter 8'. We also know that expectations often shape our perceptions 'chapter 9', and nobody doubts the allure of free merchandise 'chapter 3'. At the conclusion of each chapter, then, the reader is left with someone else¿s reinforcing account of what he/she is already aware of. Whereas related offerings such as Tim Harford¿s ¿Undercover Economist¿ or Nassim Taleb¿s ¿Fooled by Randomness¿ offer technical and less-tangible insights into topics such as economics, behavior, and probability, ¿Predictably Irrational¿ relies too heavily on the concept that the author¿s perspective is deeper than our own. This leads to a distillation of complex psychology 'not to mention biochemistry and evolution, among others' into oversimplified explanations and human trials involving free beer. In the end, one is left with the feeling that the author himself is much more interesting than anything uncovered by his experiments on college kids.
Guest More than 1 year ago
I enjoyed reading the book but now that I think about the examples and experiments discussed in the book, I find most of them flawed. So I wondered why I did not catch the flaws when reading the book. I now realize it was because Dan (the author) either cleverly manipulates the readers or he is just a natural at it and does not realize that he is manipulating the audience. So I will reserve personal judgement against him, whether his style is purposely or just inadvertently manipulative. Afterall, he claims to be expert in behaviorial science so I can easily imagine that the book and the manipulative style are an experiment that he is conducting to see how people respond. So without further ado, let me begin. His very first discussion is about his personal experience with a tragic severe skin burn, which led him to question how people perceive things and how they rationalize their behavior. In writing about his own experience he draws the reader's sympathy - i.e., he gets the readers off-guard into a sympathetic and trusting mode, whereby they immediately admire him for overcoming his tragedy and delivering great research to the mass audience. Very clever, Dan! Throughout the book he mentions MIT, Harvard, Berkeley as the places where he conducts research and that he had an offer to be at Stanford - he cleverly drops names of prestigious research schools all in an attempt to create an impression that his work is rigorous. I sub-consciously gave him a pass while reading the book, but now I feel I was duped. Here are some flaws with the examples and/or experiments he discusses: 1) He suggets that perhaps our ethical compass is coarse - i.e., for most people the compass does not respond to petty theft they commit but does respond to large scale theft they might contemplate but not commit to -- like not stealing a carton of pencils but willing to steal one pencial from the stationery room. First of all, we don't steal a pencil from a store but we do take from our workplace -- so clearly it is not about the number of pencils but rather the context where the pencil is to be had. I claim we take a pencil from work without paying for it in cash but not from a shop because we can compensate the firm by working a little harder or longer and at the same time avoiding the transaction cost of purchasing a 10 cent pencil at a store or by trying to compensate our employer with 10 cents in cash. The reason people don't steal the entire box of pencils is because they don't need so many pencils all they need is one pencil. Dan suggests that people could be honest and purchase it at a nearby store for 10 cents. He ignores that going to the store and then paying 10 cents for a pencil also comes with a large transaction cost, which is a pure deadweight cost which can be easily avoided by just taking the pencil from the office. The social welfare is greater if one just takes the pencil instead of imposing a transaction cost on the owner and on oneself. Even leaving 10 cents with the secretary at the firm entails a huge transaction cost for the firm. Therefore, it is better to just take the pencil. Furthermore, our compass works just fine, even for petty stuff, when others take a pencil. Thus, our compasses do in fact respond to petty conduct. By the way, I would take a pencil from work even when the secretary or the boss is observing me. So I don't think Dan has seriously thought about this issues even though he seems to think he has. 2) The experiment about selling a football ticket (which was won in a lottery) and about buying a ticket is also flawed. The reason why the ticket winners wanted $2400 for their ticket was probably because that was the 'going' price for the tickets in the secondary (scalpers) market, just before the game. And, the reason the students who did not win the tickets in the lottery were willing to pay at most $170 or $175 (he reports two different numbers) is because that is all they
Guest More than 1 year ago
Predictably Irrational is an exceptional book on a number of fronts. First, from the writing style, it is absolutely accessible and that isn't always the case when academians convert research into a book designed for the mass market. This book is as accessible and interesting to read as Freakonomics was. Second, this is the first book to do such a thorough job of connecting psychology, human behavior and economics. This book should be an immediate read for every marketer, salesperson, CEO or non-profit without exception. When you read this book you'll learn about how you and I make decisions and if you are honest you'll recognize yourself over and over in the reading. You and I make decisions the same way everyone else does. And, as a marketer, a salesperson, a funds solicitor for a non-profit, we'll make more, get more and achieve more to the extent that we leverage these automatic processes. Most people don't fight or even acknowledge their own decision making processes, they just go through the process. What they think is control is really an illusion as this book so clearly points out. You and I can and are regularly influenced subliminally by the way information is presented. The chapters on Free and the chapter on The Fallacy of Supply and Demand are invaluable. Ariely's explanation of price anchoring will change how you think about MSRP or even your intitial pricing discussion in sales. His experiement using the last two digits of your social security number is very eye opening. This is also an example of something very easy for you to test in your own marketing organization or social group.s Interestingly, where at the time of this review we are facing a recession, I find this book essential reading for those who would change the face of the recession as well as the duration. It was interesting to me to read some of the negative reviews of the book but most of them focused on wanting to challenge the conclusions without reading all of the research papers. And, I didn't see many of the people who were critical provide the level of observational credibility that Mr. Ariely does. This book just made it to my desktop library, the 10 books I'll refer back to again and again when I create marketing material, influence strategies or consult with clients. This book is a powerful read.
Alex Zhilyakov More than 1 year ago
Nook ebook is 2009 edition and costs more than newer paperback 2010 edition. Annoyed Nook customer
bbman335 More than 1 year ago
I wanted to like this book, I really did, but what a let down. The premise of the book is that the author conducts 'experiments' to determine how people make decisions-not based on facts, but on other factors that make the decisions seem irrational. Great, I make decisions, this probably applies to me. In a word, no. Every 'experiment' suffers from at least one fatal flaw which invalidates the conclusions it generates...but the author even goes further and makes conclusions that don't even apply to the 'experiment'. 1) Selection bias is present in every 'experiment" as the subjects of the 'experiment' are students from liberal universities. (But the author tries very hard to convince us that Cal-Berkeley is a moderate institution...that's irrational!) The problem with students being the primary target of the "experiments" is that they are, well students. I went to college and yes, many decisions I made in college were quite irrational looking back, so maybe the book should be called "college kids make irrational choices." 2) the conclusions are not substantiated by the "experiment". In one, he surveys about sexual issues and asks the group one set of questions, then later asks them the same questions while they masturbate. I'm on the edge...will the results will be different? Duh! My conclusion to this survey is different from the authors, now stopped making decisions while I masturbate, and they are much more rational. In another survey, he sees if ownership changes perception of value and he uses basketball tickets at Duke. Those that have tickets won't part with them for less than $2400, those that don't have tickets are willing to pay $170...so the conclusion is that having something makes it inherently more valuable just because you own it...funny how the actual value of the tickets is omitted. I'm thinking $2400 was likely the going rate for those tickets, but what student has that kind of money to go to a basketball game? Of course they wouldn't offer that to buy the tickets, if they could, do you think they would have wasted a week in line for a chance to get a ticket? That would have been irrational. In a third example, he let his students select their own due dates for papers. Those that had their deadlines given to them got better grades than those that set their own deadlines. Fine, so what is the conclusion? College kids are unstructured and need guidance? No, the conclusion is that college kids procrastinate...even though no part of the study indicated when the students began to work on the papers for submission...since they got lower grades, they must have procrastinated. Um, ok, I guess..really? 3)The author clearly has an agenda and even tries to disprove supply/demand theory which in the authors opinion changes based on social/market norms. How does he do this? He charges 1 cent for a Hersey's kiss then offers them for free. They take less once it is free. So because they didn't take the whole bowl even though it was free, it's because social norms have taken over and market rules fail to apply. Really? Go to a homeless shelter and conduct the same experiment or put out free water bottles in Haiti and see if they just take one to be polite. I'm betting the results might be different. In the end, the book makes no breakthroughs, offers no insight and is highly biased. If that appeals to you, read on, otherwise pass.
SDDA More than 1 year ago
I read this book and loved it so much I've given it as a gift to everyone from my 86-year-old aunt to my 34-year-old sister. It's written in a lively manner and many of its points are pretty eye-opening. I've also heard Mr. Ariely interviewed several times and he is a very engaging and funny guy.
EmreSevinc on LibraryThing More than 1 year ago
Predictably Irrational belongs to the category of books such as Nudge by Thaler and Sunstein, and Bounded rationality: The adaptive toolbox by Gigerenzer. You'll find similar examples in the books by those authors and maybe in more detail so why another book on a similar subject? Maybe it is because Dan Ariely concentrated on behavioral economics after a very critical and painful personal experience. Or maybe because he is the professor from MIT with a very keen sense of humour when it comes to explaining his examples. Or can it be because he generally relates different modes of 'irrationality' to his life, too?If you haven't read any book from Gigerenzer, Thaler, Sunstein, etc. then Predictably Irrational may be a very good start to understand what this behavioral economics stuff is all about. I guess living afer (or in the middle of) a global economic crisis gives people opportunities to question the assumptions that they didn't even realize they held. This may be one of the reasons why these kind of books and research became very popular. So if you want a good and non-academic headstart in behavioral economics this book is fine as a first choice. If you want to learn and understand more about the field please invest some time in Gigerenzer's, Kahneman's and Tversky's work, too.Your reward will be a much better understanding of human nature and you'll be much more suspicious of classical economic theories, rational agent based assumptions and the 'virtues' of free markets.
ashergabbay on LibraryThing More than 1 year ago
In the past decade or so Behavioural Economics has become all the rage in both academic circles and among the general public. The financial crisis that started with the bursting of the sub-prime mortgage bubble in the US a couple of years ago has given behavioural economists a major boost.The basic premise of behavioural economists is that humans are not necessarily rational when they make economic or financial decisions. One of the cornerstone assumptions of ¿traditional¿ economics is that we decide based on rational analysis of costs and benefits and seek to maximise our financial gains. It turns out this is not the case and many of our decisions are driven by ¿irrational¿ factors that defy the premises of traditional economics.Professor Dan Ariely is another ex-Israeli scientist that has popularised Behavioral Economics with his book Predictably Irrational. Using relatively simple experiments he shows that many of our decisions are influenced by irrational factors, but more importantly, that this irrational behaviour is, in many cases, predictable. In other words, contrary to popular belief (at least in the last 300 or so years of the ¿scientific era¿), humans are inherently irrational.Here are a few examples:- People will feel better taking a medicine that costs 10 times as much as another, identical, medicine.- When faced with a free product, we will likely ¿buy¿ it even if they don¿t need it.- Sexual arousal will lead people to change their behaviour and perform deeds they deem immoral.- We will think food or drink are better if they are presented in a more glamorous setting.Ariely¿s book is highly entertaining and provides some delightful nuggets of truth about ourselves. But I didn¿t find many of his ¿discoveries¿ surprising. It is true that we like to see ourselves as rational machines, but most of our life experiences clearly demonstrate this is not the case. Blind belief in a purely rational brain is, well, irrational. The work of Nobel prize winner Daniel Kahenman (with his partner Amos Tversky), around how people decide between alternatives involving risk, has been known for many years. Ariely¿s achievement is mainly in popularising the subject and presenting it in a way that most people can understand.
cgodsil on LibraryThing More than 1 year ago
Ariely is interested in understanding how we actually make our decisions; he shows thatcertainly the standard economic model does not apply. The ideas introduced are importantand interesting. The book is written in a light and engaging style, which is both a blessingand a curse. On the one hand, it's an easy read; on the other, I am confident that the key ideas could have been expressed eloquently in 50 pages, rather than 250.
kristenn on LibraryThing More than 1 year ago
Unfortunately, I read this two months ago and thus don't remember much beyond enjoying it. Some overlap with Thaler/Sunstein's Nudge (that's not a bad thing). I wondered whether the FREE! phenomenon in the first part of the book is really that widespread; I don't fall for it and I'm pretty average. The discussion of social vs market norms was probably the most interesting, and inspirational, but it got unrealistically idealistic when moving into employee behavior. Ditto the Burning Man analogy -- that is not a cross-section of society. It's too specialized and self-selected a group to really apply elsewhere. Also disagreed re the ethics of placebo studies, but it was an interesting discussion regardless. He includes the Josh Bell subway experiment, which is always an interesting bit. I have a note that I found the dishonesty section weak but at 35 pages I'm not rereading to remember why.
shmulkey on LibraryThing More than 1 year ago
Very interesting book. The descriptions experiments reviewing deviations from economically rational behavior were compelling; the author's apparent faith in the state or experts to "help" the (somewhat, IMHO) economically irrational a bit less so.
Neale on LibraryThing More than 1 year ago
Some great research and some amazing findings about how and why we react the way we do.
citygirl on LibraryThing More than 1 year ago
Why: Audio nonfiction, my new thing. Also, it discusses why people do the things they do, one of my favorite things to ponder.Ariely is a professor at MIT¿s business school (well, his website says he¿s moved on to Duke) and specializes in ¿behavioral economics,¿ which seems to be marketing behavior. He explains that people often make irrational decisions that seem to defy common sense and critical thinking and he sets out to discuss his answers to ¿why do they/we¿? Interesting stuff. Each section or chapter focuses on one aspect of the irrational decision-making, e.g., the word ¿free¿ does dangerous things to our psyches and we buy all sorts of things we wouldn¿t normally to get the ¿free¿ thing; or that we think that product that costs more is more effective, even if a lower priced product is identical in all relevant ways; that we place more value to items we possess than those we do not; that we can be ¿primed¿ to think or behave a certain way; and most alarmingly, that people ¿anchor¿ on to an arbitrarily assigned initial price and forever more value a product in terms of what we first paid for it. Fascinating really.What I think: quite informative, and, if I can keep the concepts in mind, may have an impact on the decisions I make going forward, like watching out for priming, or anchoring; or wasting time and money keeping options open. I found it amusing that he often experimented on his graduate students and MIT students as a whole, and the majority of the experiments seemed to well illustrate his points; however, some of the experiments were not convincing to me, I kept finding holes in the process, or maybe the experiment was just not explained in enough detail. Note re audio version: it was narrated by a lively English gentleman, who while enjoyable to listen to, seemed out of sync with the clearly American tone of the book. Can you imagine listening to what sounds like a proper English gentleman describe an NFL game play-by-play. Or using the word ¿feds¿ to describe the government? Very odd, and kind of distracting. Not to say that the reader must be of the same nationality/background as the author, but such a discrepancy should be avoided I think. I¿d love to listen to that guy (name forgotten) read something else, more fitting.
datrappert on LibraryThing More than 1 year ago
Interesting and much better researched than Malcolm Gladwell's books, Ariely's story of how irrational most of our decisions are doesn't come across as a surprise, but it is depressing, nevertheless. As he narrates tale after tale of people making irrational decisions, you'll see yourself time and again. What is most interesting is how by varying his experiments just a little, he can produce significantly different results. Sad to think that we aren't generally honest unless we are being watched -but I'm afraid he is right. The other depressing thing is just how poor we are at gauging the extent of our irrationality, even when we understand that there are situations, such as when we are sexually aroused, when our decision-making powers are weakened. Throughout the book, Ariely's sense of humor and self-deprecation make for an engaging read (or listen in my case.)
tjsjohanna on LibraryThing More than 1 year ago
I found many of these behavior experiments really fascinating - who knew that changing the price of a chocolate from 1 cent to free could have such a huge impact on one's decision? or that signing an honor code directly before taking a test could dramatically decrease cheating behavior? We humans are certainly an interesting bunch. Now I'd like a book that teaches me how to go against that innate response!
motjebben on LibraryThing More than 1 year ago
Fun to read! I've already checked out Ariely's next book from the library!Though Dan Ariely does NOT delve into the neuroscience of why we make irrational choices (not just economic decisions but any "value" trade-off), he does describe, in an engaging and interesting fashion, surprising experiments that show just how irrational we are when we make choices.We ALL make such choices in an irrational (though predictable) way; Ariely confesses that he still falls into such traps, even though his expertise is in recognizing such behavior.Nevertheless, he suggests that knowing that we do this can help us make better decisions and help maximize our value: How many of us have forgotten, sometimes (maybe even often?), that while we "spend" time at work to get ahead (or even keep up), we may be doing it at greater cost - like missing time with our precious children that are rapidly growing up!That is an "economic" decision, too, though Ariely also covers the monetary aspects of economics too - cash make transactions more tangible than non-cash, for example. I was also fascinated to learn that our "irrationality" often adds elements that make the traditional "Law of Supply and Demand" unworkable. And the word "free" usually causes us to cast all reasoning aside. And there is a big difference between "market norms" and social norms".There is much interesting information in "Predictably Irrational" that is counter-intuitive and makes is a worthwhile read. I also enjoyed Ariely's personal anecdotes - they made the book fun to read.
ashishg on LibraryThing More than 1 year ago
Book is collection of behavioural experiments by the author. While book is definitely verbose can be easily trimmed to half, it's a easy quick read and shows certain interesting insights to human nature. Chapter on social norm, relative preference, price of zero and dishonesty are particularly good.
Darcia on LibraryThing More than 1 year ago
Most people think they make their decisions based on facts, research and personal feelings. We believe our choices are, for the most part, rational. And most of us like to think that we behave spontaneously, in a way unique to each of us. Dan Ariely shows us just how predictable - and irrational - much of our decision-making truly is. Ariely has an easy, conversational writing style. While filled with facts and research, there is nothing dry or dull about the content. This is a well written book that should give us all something to think about.
paulsignorelli on LibraryThing More than 1 year ago
We all seem to fall into the trap of making what Dan Ariely calls ¿predictably irrational¿ decisions in his book "Predictably Irrational: The Hidden Forces That Shape Our Decisions"--we engage in predictably irrational behavior on an almost daily basis. Following Ariely through entertaining summaries of his research and observations helps us understand what leads us down this path--and, if we're lucky, might even help us and those with whom we work become a little less irrational in our decison-making process.
davedonelson on LibraryThing More than 1 year ago
Despite what the economists would have us believe, there is little about human behavior that is rational. Dan Ariely's fascinating experiments prove that time and time again. As a consultant, I can attest to the veracity of his conclusions. I've seen dozens of compensation plans for employees, for example. Many of them--especially those aimed at salepeople--are designed to give the employee incentives to work more, harder, more productively, etc. Most of these plans fail to produce the desired results completely, or at best, achieve some of the goals while creating some completely unexpected outcomes, usually much to the chagrin of management. Ariely understands why that happens, and explains it in an entertaining, accessible style that makes this book a winner.
bezoar44 on LibraryThing More than 1 year ago
Dan Ariely recounts a variety of psychological experiments he has performed over the years (sometimes alone; usually in collaboration with colleagues, whom he acknowledges graciously). Collectively, the experiments illustrate that the concept of the rational, utility-maximizing individual that lies at the heart of modern economic theory simply doesn't describe how real people think and act. Ariely's writing is accessible, conversational, and often funny; this is not at all an academic book, but should be very valuable to anyone interested in the intersection of psychology, economic theory, and public policy.
flydodofly on LibraryThing More than 1 year ago
Why do we do things? This book is an attempt to answer this question. Interesting and never overwhelming, it was a refreshing read.
Shmuel510 on LibraryThing More than 1 year ago
Dan Ariely has an experiment for everything. What's the least painful way to remove bandages? How does the number of options to choose from affect one's likelihood of buying any of them? Do more expensive placebos work better than cheaper ones? To answer these questions, and pretty much anything else that crosses his event horizon, conventional wisdom is forcibly tossed aside in favor of empirical evidence. I suspect he's an exhausting person to be friends with, but it does make for some fascinating, sometimes counterintuitive insights.The overall main thrust of the book is that traditional economics is very, very wrong in assuming that people -- in the aggregate -- make rational decisions. In fact, people make irrational decisions all the time, but they do so in predictable ways. Understanding those ways ought to make it possible to use them to make better policies and decisions. He makes an excellent case for it.
wvlibrarydude on LibraryThing More than 1 year ago
Interesting read, but a little light. I was taken back by how little he cited outside of his own work. He does toot his horn a tad too much. Still an interesting look at different decision making habits for people. I would have liked more research to back up the conclusions (some were a leap).
emily.steed on LibraryThing More than 1 year ago
Basically, this book seemed like a low-rent Freakonomics. Not as amusing, slightly less interesting, a little drier. It was the same basic format: odd situation, hypothesis, description of experiment, analysis. Lather, rinse, repeat. Some of what he had to say was interesting, but for the most part the conclusions he reached seemed pretty obvious in the first place. For example, people are more willing to steal when they're not stealing cash, and they steal more when what they're stealing is more removed from cash. (The example he gives is office supplies - someone is more likely to take a pen worth $0.10 from the office than they are to take $0.10 from the petty cash jar. This seems pretty obvious to me...) If you were going to read one behavioral economics book, I'd skip this and read Freakonomics instead. If you like Freakonomics and wanted to read another, this wasn't as good but it's a quick read and interesting enough.