Predictably Irrational: The Hidden Forces That Shape Our Decisions
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* Why do our headaches persist after taking a one-cent aspirin but disappear when we take a 50-cent aspirin?
* Why does recalling the Ten Commandments reduce our tendency to lie, even when we couldn't possibly be caught?
* Why do we splurge on a lavish meal but cut coupons to save twenty-five cents on a can of soup?
* Why do we go back for second helpings at the unlimited buffet, even when our stomachs are already full?
* And how did we ever start spending $4.15 on a cup of coffee when, just a few years ago, we used to pay less than a dollar?
When it comes to making decisions in our lives, we think we're in control. We think we're making smart, rational choices. But are we?
In a series of illuminating, often surprising experiments, MIT behavioral economist Dan Ariely refutes the common assumption that we behave in fundamentally rational ways. Blending everyday experience with groundbreaking research, Ariely explains how expectations, emotions, social norms, and other invisible, seemingly illogical forces skew our reasoning abilities.
Not only do we make astonishingly simple mistakes every day, but we make the same types of mistakes, Ariely discovers. We consistently overpay, underestimate, and procrastinate. We fail to understand the profound effects of our emotions on what we want, and we overvalue what we already own. Yet these misguided behaviors are neither random nor senseless. They're systematic and predictable—making us predictably irrational.
From drinking coffee to losing weight, from buying a car to choosing a romantic partner, Ariely explains how to break through these systematic patterns of thought to make better decisions. Predictably Irrational will change the way we interact with the world—one small decision at a time.
got close to the table. We did this because we wanted to make sure that we did not attract different types of people in the different conditions—avoiding what is called self-selection. 51 p re d i c t abl y i r r a t i o n a l So what happened when the “customers” flocked to our table? When we set the price of a Lindt truffle at 15 cents and a Kiss at one cent, we were not surprised to find that our cus- tomers acted with a good deal of rationality: they compared the price and quality of
experiments, and found that consumers who stop to reflect about the relationship between price and quality are far less likely to assume that a dis- counted drink is less effective (and, consequently, they don’t perform as poorly on word puzzles as they would if they did assume it). These results not only suggest a way to overcome the relationship between price and the placebo effect but also suggest that the effect of discounts is largely an unconscious reaction to lower prices. So
abl y i r r a t i o n a l the three options, the print-and-Internet combination would be the offer we would take. Here’s another example of the decoy effect. Suppose you are planning a honeymoon in Europe. You’ve already decided to go to one of the major romantic cities and have narrowed your choices to Rome and Paris, your two favorites. The travel agent presents you with the vacation packages for each city, which includes airfare, hotel accommodations, sightsee- ing tours, and a free
second main lesson is that although irrationality is com- monplace, it does not necessarily mean that we are helpless. Once we understand when and where we may make errone- ous decisions, we can try to be more vigilant, force ourselves to think differently about these decisions, or use technology to overcome our inherent shortcomings. This is also where businesses and policy makers could revise their thinking and consider how to design their policies and products so as to provide free
182–83, 266 television: wardrobing, 196, 223 cable, “trial” promotions and, Weisberg, Ron, xv 136–37 Wertenbroch, Klaus, 112, 266 relativity and displays of, 3–4 Whitman, Walt, 40–41 Ten Commandments, 16, 207–9, 213, “Whoever you are holding me now in 216 hand” (Whitman), 40–41 tests: Williams-Sonoma, 14–15 standardized, 85 wineglasses, taste affected by, 165 see also cheating on tests wine prices, 26–27, 29 Thaler, Dick, 129, 242 Winston, Harry, 24 Thanksgiving, offering to