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Predictably Irrational: The Hidden Forces That Shape Our Decisions
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Product Description
Why do smart people make irrational decisions every day? The answers will surprise you. Predictably Irrational is an intriguing, witty and utterly original look at why we all make illogical decisions. Why can a 50p aspirin do what a 5p aspirin can't? If an item is "free" it must be a bargain, right? Why is everything relative, even when it shouldn't be? How do our expectations influence our actual opinions and decisions? In this astounding book, behavioural economist Dan Ariely cuts to the heart of our strange behaviour, demonstrating how irrationality often supplants rational thought and that the reason for this is embedded in the very structure of our minds. Predicatably Irrational brilliantly blends everyday experiences with a series of illuminating and often surprising experiments, that will change your understanding of human behaviour. And, by recognising these patterns, Ariely shows that we can make better decisions in business, in matters of collective welfare, and in our everyday lives from drinking coffee to losing weight, buying a car to choosing a romantic partner.
Product Details
- Amazon Sales Rank: #90335 in Books
- Brand: HarperCollins
- Published on: 2008-02-19
- Released on: 2008-02-19
- Format: Deckle Edge
- Original language: English
- Number of items: 1
- Dimensions: 9.00" h x 1.01" w x 6.13" l, 1.28 pounds
- Binding: Hardcover
- 294 pages
Features
- Great product!
Editorial Reviews
From Publishers Weekly
Irrational behavior is a part of human nature, but as MIT professor Ariely has discovered in 20 years of researching behavioral economics, people tend to behave irrationally in a predictable fashion. Drawing on psychology and economics, behavioral economics can show us why cautious people make poor decisions about sex when aroused, why patients get greater relief from a more expensive drug over its cheaper counterpart and why honest people may steal office supplies or communal food, but not money. According to Ariely, our understanding of economics, now based on the assumption of a rational subject, should, in fact, be based on our systematic, unsurprising irrationality. Ariely argues that greater understanding of previously ignored or misunderstood forces (emotions, relativity and social norms) that influence our economic behavior brings a variety of opportunities for reexamining individual motivation and consumer choice, as well as economic and educational policy. Ariely's intelligent, exuberant style and thought-provoking arguments make for a fascinating, eye-opening read. (Feb.)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
Review
"Surprisingly entertaining. . . . Easy to read. . . . Ariely's book makes economics and the strange happenings of the human mind fun." (USA Today)
"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, New York Times bestselling author of How Doctors Think)
"PREDICTABLY IRRATIONAL is a charmer-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 author of Stumbling on Happiness)
"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." (Kenneth Arrow, Nobel Prize in Economics 1972, Professor of Economics Stanford University)
"Inventive. . . . An accessible account. . . . Ariely is a more than capable storyteller . . . If only more researchers could write like this, the world would be a better place." (Financial Times)
"In creative ways, author Dan Ariely puts rationality to the test. . . . New experiments and optimistic ideas tumble out of him, like water from a fountain." (Boston Globe)
"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)
"PREDICTABLY IRRATIONAL is a scientific but imminently readable and decidedly insightful look into why we do what we do every day...and why, even though we 'know better,' we may never change." (Wenda Harris Millard, President, Media, Martha Stewart Living Omnimedia)
"A fascinating romp through the science of decision-making that unmasks the ways that emotions, social norms, expectations, and context lead us astray." (Time magazine)
"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!" (Nassim Nicholas Taleb, New York Times bestselling author of The Black Swan: The Impact of the Highly Improbable)
"After reading this book, you will understand the decisions you make in an entirely new way." (Nicholas Negroponte, founder of MIT's Media Lab and founder and chairman of the One Laptop per Child non-profit association)
"Ariely's intelligent, exuberant style and thought-provoking arguments make for a fascinating, eye-opening read." (Publishers Weekly)
"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)
"Predictably Irrational is an important book. Full of valuable and entertaining insights that will make an impact on your business, professional, and personal life." (Jack M Greenberg, Chairman, Western Union Company, Retired Chairman and CEO, McDonald's Corporation)
"Predictably Irrational is clever, playful,humorous, hard hitting, insightful, and consistently fun and exciting to read." (Paul Slovic, Founder and President, Decision Research)
"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." (Chip Heath, Co-Author, Made to Stick, Professor, Stanford Graduate School of Business)
"Sly and lucid. . . . Predictably Irrational is a far more revolutionary book than its unthreatening manner lets on." (New York Times Book Review)
"Ariely's book addresses some weighty issues . . . with an unexpected dash of humor." (Entertainment Weekly)
"A delightfully brilliant guide to our irrationality-and how to overcome it-in the marketplace and everyplace." (Geoffrey Moore, author of Crossing the Chasm and Dealing with Darwin)
"A taxonomy of financial folly." (The New Yorker)
"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, Nobel Laureate in Economics, 2001 Koshland Professor of Economics, University of California at Berkeley)
"An entertaining tour of the many ways people act against their best interests, drawing on Ariely's own ingeniously designed experiments. . . . Personal and accessible." (BusinessWeek)
From the Back Cover
How do we think about money?
What caused bankers to lose sight of the economy?
What caused individuals to take on mortgages that were not within their means?
What irrational forces guided our decisions?
And how can we recover from an economic crisis?
In this revised and expanded edition of the New York Times and Wall Street Journal bestseller Predictably Irrational, Duke University's behavioral economist Dan Ariely explores the hidden forces that shape our decisions, including some of the causes responsible for the current economic crisis. Bringing a much-needed dose of sophisticated psychological study to the realm of public policy, Ariely offers his own insights into the irrationalities of everyday life, the decisions that led us to the financial meltdown of 2008, and the general ways we get ourselves into trouble.
Blending common experiences and clever experiments with groundbreaking analysis, Ariely demonstrates how expectations, emotions, social norms, and other invisible, seemingly illogical forces skew our reasoning abilities. As he explains, our reliance on standard economic theory to design personal, national, and global policies may, in fact, be dangerous. The mistakes that we make as individuals and institutions are not random, and they can aggregate in the market—with devastating results. In light of our current economic crisis, the consequences of these systematic and predictable mistakes have never been clearer.
Packed with new studies and thought-provoking responses to readers' questions and comments, this revised and expanded edition of Predictably Irrational will change the way we interact with the world—from the small decisions we make in our own lives to the individual and collective choices that shape our economy.
Customer Reviews
Most helpful customer reviews
261 of 273 people found the following review helpful.
An excellent book which provides valuable insights
By Irfan A. Alvi
This book and Dan Ariely have recieved a lot of media attention, so I approached the book with some skepticism, thinking that it might be overhyped. I'm pleased to report that my skepticism turned out to be unwarranted.
The book has many strengths, the main one being that it convincingly presents many ways people are wired and/or conditioned to be irrational, usually without even being aware of it. This eye-opening revelation can be a bit disheartening, but the good news is that we can fix at least some of this irrationality by being aware of how it can arise and then making a steady effort to override it or compensate for it. That's not an easy task, but it can be done. As a simple example, I've programmed a realistic exercise schedule into my PDA, and I've been very consistent with my exercise because of that. The PDA imposes a discipline on me which I couldn't otherwise impose on myself (as I know from experience).
The book is also well written, and I would even say enjoyable to read. The many experiments described in the book are presented in a lively way which elicits interest, and Ariely goes into just the right amount of detail -- enough to convey the basic experimental designs, results, and plausible interpretations, without boring the reader by getting into esoteric points which are more appropriate for journal papers.
The one criticism I have of the book, which applies to most of Western pscyhology, is that most of the described experiments used US college students as subjects. That raises a serious question regarding the extent to which the results can be generalized to people of the same age who aren't college students, people of other ages, and people outside the US. Study of cultural psychology reveals that differences due to these factors can be profound, and Ariely himself notes a Korean study where such differences were observed, but he doesn't really elaborate on the point.
Despite this one criticism, I think this is an excellent and authoritative book, and among the better ones in the "why smart people do dumb things" genre, so I highly recommend it. The insights revealed are both fascinating and practical, if you can muster the discipline to apply them.
389 of 424 people found the following review helpful.
Made me think through some things I'd overlooked about market behavior
By Drifty
I have been thinking about economics seriously for nearly 30 years. Classical economics is built to no small degree on the notion that people will generally act in their own best self interest, after rationally and intelligently examining their options. This fit my world view fine in my first career as an engineer (BS and MS in Electrical Engineering).
From my 2nd Career as a Business Development person (MBA), I began to have to deal with people's tendency to not entirely think things through.
Here in this book, we have a professor who runs socioeconomic tests on his MBA students. These students are smart enough, worldly enough, experienced enough, and educated enough to approximate the standard economic assumptions and produce reasonably rational behavior.
Guess what. Even among broad experiments conducted on multiple MBA classes over time, one can predictably pre-bias the outcome of a particular run of a socioeconomic experiment by what seeds you plant in the class members' minds before the experiment. For example, in one experiment in estimating prices, the author requires his students to write the last two digits of their social security numbers on the top of the paper. Simply the act of writing a high number (e.g., 88) versus a low number (e.g., 08) produced statistically significant correlatable influences on the students' later price estimates. Those compelled to write "88" at the top of their papers would reliably estimate higher prices than those compelled to write "08" at the top of their papers, to a statistically significant degree.
Extrapolating to "real life." Watching Fox News will tend to make you more conservative without you knowing it. Watching MSNBC news will tend to make you more liberal without you knowing it.
If you want to understand "real truth," you are just going to have to do a little more than self-select your news feeds. You are going to have to seriously consider a diversity of viewpoints.
Moreover, if you have Social Darwinist beliefs as I once did, you may need to re-think the concept of the Poverty Trap. Early pre-conditioning really does make a difference.
Here is the way I think of it as an Engineer. Classical Economic Theory is analogous to Classical Newtonian Physics. There is nothing badly wrong with it, and it is a good approximation for most real world problems at the middle of the distribution.
However, General Relativity is indeed more correct that Classical Newtonian Physics, and the additional knowledge makes a real difference in certain special cases. And, those special cases are sometimes the really important ones. Likewise, Behavioral Economics is adding something very valuable to our knowledge of Classical Economics.
Read this only if you are brave enough to contemplate that the world might be a little more complex than we wish it were.
300 of 333 people found the following review helpful.
Welcome to the fuzzy world of being human.
By D. Stuart
Dan Ariely is the guy you'd want at your dinner party. He's witty, smart and also very inclusive - sharing his passion for the way humans tick in a way that makes us feel great about the fact that, rational as we like to think we are, we make bad snap decisions, we cheat and we get ruled by our heart precisely when the facts are screaming "go the other way!" There's a lot in this writing which celebrates our human-ness. Why do we do this?
What Ariely has done here is shift a lot of the thinking developed by such pioneers as Kahneman & Tversky who worked in behavioural economics, and moved it into the everyday sphere. And he's done a great, insightful job. Where the behavioural economists are focused on financial decisions (why we buy high and sell low - and confound the assumptions of the classic economists who assume 'the rational man,) Ariely eschews the technical language and walks us through everyday examples of our often fuzzy and quite irrational decision-making.
The result is utterly engaging - and this easy 300 page read still has academic rigour and strong foundations. Ariely cites many experiments and examples, and shows that we often get things wrong because we frame things the wrong way, mis-judge probabilities, apply heuristic rules of thumb that don't always work, or we just plain let our emotions rule.
We love to think that we're educated, rational and moral. Yet who hasn't overestimated the upside on a sure-fire investment, bought some clothing that we knew was a mistake even as we bought it, or got our wires crossed between work-rules and social rules? This book is fascinating, entertaining and very, very illuminating.
- Recommended for the general public, but I'd urge marketers, market researchers and business people to read this one carefully. Dan provides excellent dinner-party insights, but they apply to our real world and explain why so many poor decisions are made - whether by customers or by the 'rational' business people who make million-dollar decisions.
- Recommended companion book: Nudge: Improving Decisions About Health, Wealth, and Happiness here one of the godfathers of behavioural economics discusses the way we can manage the "choice architecture" in our world.
