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Predictably Irrational: The Hidden Forces That Shape Our Decisions

Predictably Irrational: The Hidden Forces That Shape Our Decisions

3.8 181
by Dan Ariely

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ISBN-10: 0061854549

ISBN-13: 9780061854545

Pub. Date: 05/19/2009

Publisher: HarperCollins Publishers

"A marvelous book… thought provoking and highly entertaining."
—Jerome Groopman, New York Times bestselling author of How Doctors Think

"Ariely not only gives us a great read; he also makes us much wiser."
—George Akerlof, 2001 Nobel Laureate in Economics

New York Times Book


"A marvelous book… thought provoking and highly entertaining."
—Jerome Groopman, New York Times bestselling author of How Doctors Think

"Ariely not only gives us a great read; he also makes us much wiser."
—George Akerlof, 2001 Nobel Laureate in Economics

New York Times Book Review

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.

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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

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Predictably Irrational: The Hidden Forces That Shape Our Decisions 3.8 out of 5 based on 0 ratings. 181 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.
Anonymous 11 months ago
Is chained to pole "whowants her"
Anonymous More than 1 year ago
I had attended the coursera course by the author and found this book to be very informative and applicable to dat to day life.
ctfranklin28 More than 1 year ago
"Predictably Irrational" by Dan Ariely is a book that I already recommended to friends on Twitter and Facebook before I even finished the book because it challenges so much of what I thought about human nature. According to Ariely, human nature can fall prey to irrational acts. Most of us know that, but what I find more interesting is that Ariely says that these irrational acts are predictable. They aren't just things we do every once in a while. Ariely demonstrates this theory by tackling big aspects of human nature (greed, lust, procrastination, lying) in an engaging way in every single chapter. Each chapter presents the issue or question and a central "What Would You Do?" type of experiment that Ariely often conducted on MIT (or other campus) students. Ariely then walks you through the results and the bigger implications of what that means. The results and implications of his experiments were truly astounding. Some of the results he came back with include: 1. What we believe-Saving is actually a good thing. What we actually do- Procrastinate because our brain focuses more on the now. 2. What we believe-We know the price of something What we actually do-There really isn't a price to anything we sell or make, until we "anchor" it. That all depends on the first price we pay for something (kind of like the baby ducks "imprinting" on the first thing they see. 3. What we believe-We have the same sexual interests and tastes, no matter what. What we actually do- We are actually a lot more freakier than we anticipate (Cold & Warm states) 4. What we believe-We aren't influenced by what our friends eat at when we go out. What we do-We are highly influenced by what our friends do and often make choices (ones we're not always happy with) based on what others thing 5 What we believe-We won't lie if given the chance What we do- We do lie with things that have a distance to the direct thing or person we are stealing from or can make feel excuses for. These kinds of ideas challenged my notion of human nature to the core, which is why I truly recommend this book to anyone who likes psychology, but wants to read something a little different than a textbook. Ariely is an excellent teacher and selects the right kinds of stories and experiments that keep you engaged. His solutions (or rather suggestions) to how we can better address the idiosyncrasies of our nature have huge implications that we should think about. I look forward to reading other books from him. For some reason, I can see this book as something Tim Ferriss would read.
Anonymous More than 1 year ago
Overall I believe Dan Ariely brought multiple good topics that was able to resonate with his entire audience. Not only did he state the many problems we face while making an economic decision, he also set up multiple experiments to prove that his statements are true. Also, multiple times during the book he gave us a scenario and told us to put ourselves in that position and see what we would do. This made it easier to comprehend and understand his points further. Overall Ariely clearly analyzes and explains all his points and most importantly why we make irrational decisions.
Anonymous More than 1 year ago
This book is generally wonderful.  It has provided some great insights on how to improve our marketing efforts and I plan on continuing to read further.   However, I’m writing this review after picking myself up off the floor because I fell out of my chair after reading the following statement (bottom of page 48), and I quote:  “If you accept the premise that market forces and free markets will not always regulate the market for the best, then you may find yourself among those who believe that the government (we hope a reasonable and thoughtful government) must play a larger role in regulating some market activities, even if this limits free enterprise.” Talk about irrational.  Dan I think you do great work. I like yours talks and your books. Both are very informative.  This statement however makes me think you have lost touch with your audience. It appears as though you have spent too much time in the irrational world of academia and too little time in the much more rational and logical world of business.  
Anonymous More than 1 year ago
This is a great book to read if you're interested in improving the decisions you make on a day to day Basis. I'm now aware of the decisions I make. I recomen this book to anyone.
Anonymous More than 1 year ago
KaibiganWP More than 1 year ago
Everyone should read this book. We are all so irrational.
Anonymous More than 1 year ago
Author-Money-Anxiety More than 1 year ago
Ariely has a talent of presenting human behavior in the most simplistic and clear manner, which helps drive the point home. I enjoyed reading the various behavioral cases outlined in the book and I highly recommend it to anyone. Although I agree with Ariely that consumer behavior is predictable, I would argue that the behavior is rational because there is always a reason behind every decision we make. In my book, Money Anxiety – how financial anxiety impacts consumer behavior and the economy, I show how consumer behavior is influenced by their level of financial anxiety, and that there is always a reason (rationality) to each decision.
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I really enjoyed this book! I thought it was very funny and it really showed me that we take a lot of things for granted and by looking at it from a different perspective, it is easier to see that things aren't always as rational as they seem. I loved the experimental designs they were very simple but they revealed a lot. I recommend this book to everyone! 
Anonymous More than 1 year ago
Huge chunks of chapter one were repeated. That chapter was about 114 pages (not exaggerating. Probably more).
Anonymous More than 1 year ago
Anonymous More than 1 year ago
Good read that follows up on a few of the topics presented in freakanomics.