Predictably Irrational: The Hidden Forces That Shape Our Decisions | Dan Ariely

Predictably Irrational: The Hidden Forces That Shape Our Decisions | Dan Ariely | Preempting irrationality

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Predictably Irrati...

	Predictably Irrational: The Hidden Forces That Shape Our Decisions Dan Ariely HarperCollins, 2008 - 304 pages average customer review:based on 124 reviews view larger image
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highly recommended

The brain on money

Would you take a pencil from work? How about a quarter from the petty cash box? Could you tell your favorite beer from ordinary swill? Why is "buy one, get one free" more effective than "half off"? Why does the pension-fund raider go free while the ATM thief goes to jail?

Ariely, professor of Behavioral Economics at MIT, explores these and other snappy, intriguing questions, and designs clever experiments to test his ideas on people - mostly students at MIT and Berkeley. From the placebo effect to procrastination, from branding to the role of expectations, Ariely peeks behind the rationalizations of common behavior and explores the intersections and divides between our social and economic worlds.

Many of his results are indeed predictable, (students with deadlines got better grades than those who set their own), but some are startling. In one experiment students were asked to unscramble sentences. One group received neutral sentences; the other worked on sentences about money. Afterwards both groups were given a puzzle and told they could ask for help. Those who had worked on the money-oriented sentences worked almost twice as long as their counterparts before asking for help. They were also less willing to help others and more likely to sit by themselves.

Similarly, students were asked to write the last two digits of their social security numbers next to a list of products, then decide if they would pay that price for each item, i.e., $23 for a cordless keyboard, $23 for a box of Belgian chocolates. Next they were to indicate what their maximum bid for the item would be. The students with higher social security digits bid correspondingly more.

Ariely also shows us that logic isn't necessarily more sensible. Though it seems logical to give yourself as much time and knowledge as possible before writing three term papers, those who chose the semester-long option performed predictably less well than those with specific deadlines.

Amusing and personable, Ariely argues that we could save better, procrastinate less, be healthier, get more from employees and bosses and outwit advertising if we understood our irrational minds. And his thought-provoking experiments may help us do all that, at least more often.

Potentially of greater interest, however, are the implicit questions surrounding public policy and regulation. A book worth talking about.

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Preempting irrationality

Ariely's ideas are not new - much of the research documenting same findings can be traced back to the 1960's - but his presentation in the context of everyday life makes 'Predictably Irrational' a very worthwhile read. Amongst many other things, the author discusses: free is not really free, and why are we so afraid of making the wrong choice; role of decoys in pricing; social versus market norms, and the funny logic that decides between the two; our tendency to overvalue what we posses.

The list goes on, but the point is: entrepreneurs, managers, stay at home parents, and everyone else in between will find something that applies to their daily routine. The book is not about 'fixing' your irrationality, but rather, about becoming aware of our own, often illogical decisions, and coming up with a way to preempt these events.

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Insights you wish to share

What a fascinating book.

The book cover and pages were not welcoming, but after starting to read it felt like you are in a good place for conversation, and that it is well worth your time to listen.

For example:
1. Which friend to take with you to a party?
The answer: he'd better be similar but inferior in some aspect
(a -a b)
2. How our stand on issues is determined?
The answer: it is highly sensitive to inital conditions.

I take it with me even to the beach to share with friends the newly set or newly phrased insights to how we behave.

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Puts science back into workplace analysis

I am an exec in a medium to large sized company and I found Dan's book engaging, accurate and useful to my business. Behaviorial ecconomics is the new black. There is too little science in modern marketing books which is why my colleagues and I are skeptical of their efficacy and prefer this genre. This book takes an analytical approach to a field prone to pseudo sciences and puts well reasoned arguments to questions of behavior in marketing. It is also a funny book, I would have loved to have been one of his students.

Excellent tho rather Predicatbly Unpredictable

Basically the entire concept can be expressed in two words: Human Element.
But those of you who prefer a little more verbosity with a tiny smithering of grandiosity will enjoy Predictably Irrational.
My only regret is that I purchased the print edition rather than the Kindle, now when I wish to quote from it; I need to bring the book with me.

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