Predictably Irrational: The Hidden Forces That Shape Our Decisions

by Dan Ariely

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1,637 ratings, 3.79 average rating, 495 reviews (more data...)

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published

February 19th 2008 by HarperCollins Canada / Harper Trade

binding

Hardcover, 280 pages

url

http://www.predictablyirrational.com/

isbn

006135323X (isbn13: 9780061353239)

description

* 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 ...more

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10/09/08

Trevor rated it:

It is important that you move this one up your list of books that you have to read. This is a particularly great book. My dear friend Graham recommended I read this book. He has recommended four books to me – and the only one I couldn’t finish was “My Cousin, My Gastroenterologist: A novel” by Mark Leyler – but he did recommend, “The Tetherballs of Bougainville” also by Leyler and that is still one of the most remarkable books I’ve ever read. I haven't written a review of tha...more

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11 comments

03/19/08

David rated it:

bookshelves: read-in-2008

Read in March, 2008

All classic economic theories are based on the assumption that consumers behave rationally, despite a considerable body of evidence to the contrary. It is only in the last 25 years that economists have begun to investigate the irrational side of consumer behavior. This field of investigation, which started with the pioneering work of Tversky and Kahneman, is usually referred to as behavioral economics.

Dan Ariely's book, "Predictably Irrational", offers a clear and compre...more

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04/04/08

Darin rated it:

Read in June, 2008

Ariely is a good writer whose book catches onto the _Freakonomics_ craze by taking a look at times when people make different decisions that typical "laissez faire" economic theories would expect. His book is a fairly easy read and does include some surprising results through social-science experimentation.

However, the text is not without its flaws. For instance, some of the breathlessly-reported "surprising" results aren't all that surprising or even controve...more

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08/01/08

Jamie rated it:

Read in May, 2008

It's only about the middle of the year, but I think Dan Ariely's Predictably Irrational is a shoe-in for my favorite non-fiction book of 2008. When I was studying psychology one of my favorite topics was judgment and decision-making, which dealt in large part with the kinks in the human mind that could lead us to irrational behavior and decisions. Why are you likely to pay more for something if you are shown a large number completely unrelated to the price? Why do people who read words like "...more It's only about the middle of the year, but I think Dan Ariely's Predictably Irrational is a shoe-in for my favorite non-fiction book of 2008. When I was studying psychology one of my favorite topics was judgment and decision-making, which dealt in large part with the kinks in the human mind that could lead us to irrational behavior and decisions. Why are you likely to pay more for something if you are shown a large number completely unrelated to the price? Why do people who read words like "elderly," "decrepit," or "senior" tend to walk more slowly when they get up and leave the room? Why does losing a dollar cause us more pain than gaining a dollar gives us pleasure? Why are we more likely to buy a product we're not even shopping for or don't even need if we're given a free sample? And, perhaps most importantly, how do people in the know --people like advertisers, politicians, and psychology graduate students-- use these ideosycracities to subtly manipulate us?

These are the kinds of questions that Ariely, a professor at MIT, discusses under the rubric of "behavioral economics." Each chapter is dedicated to a particular concept, like the anchoring effect, priming, social norms, supply and demand, procrastination, loss avoidance, the effects of price on perception, and the like. Ariely usually chats you up a bit about the concept, then walks you through a scenario or hypothetical situation that invites you to make predictions about human behavior, then comes at you with some findings from scientific research (often experiments that he's done himself) that turns your assumptions on their little figurative ears.

Ariely's style is great --conversational, to the point, made relevant to some part of your life, and easy to follow despite navigating some tricky twists of the human psyche. And it's not just dry recitations of clinical psychology experiments --everything talked about here is ensconced in everyday life. For example, this book should win some award for describing some fascinating research on the effects of sexual arousal on decision making. Let's just say that it involved naughty pictures, experimenter issued laptops covered in protective Seran Wrap, and answering some very odd questions while in the throes of ...well, you know. I'm now more disappointed than ever that all of my extra credit in college psychology classes was never earned from anything so interesting. I just had to look at ink blots and fill out the MMPI over and over again.

Really, anyone with even an ounce of curiosity about how the human mind works --or fails to work-- within the context of every day life should find a lot of fascinating material in this book. You should definitely pick it up. And then, preferably, read it.(less)

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03/25/08

MattA rated it:

bookshelves: non-fiction

Read in April, 2008

A thought-provoking book on behavioral economics. Why do we make the choices that we do? What is our motivation? Why are seemingly irrational choices made over and over? The author's natural, readable style allows the laymen easy access to his academic research and the conclusions he draws on these topics. I especially liked the author's basic emprical approach. There isn't hardly a proposition or theory in the book that hasn't been tested via experiment.

I don't agree that ever...more A thought-provoking book on behavioral economics. Why do we make the choices that we do? What is our motivation? Why are seemingly irrational choices made over and over? The author's natural, readable style allows the laymen easy access to his academic research and the conclusions he draws on these topics. I especially liked the author's basic emprical approach. There isn't hardly a proposition or theory in the book that hasn't been tested via experiment.

I don't agree that everything the author presents as "irrational" is actually "irrational." What does "irrational" mean, anyway? In the introduction, the author casts irrationality as "distance from perfection." To me that definition doesn't fit. Just because you aren't making perfect choices, doesn't make you irrational. It may mean that you simply lack perfect information about your situation or about the final outcome stemming from your choices. Or it may mean that the economist studying the situation (and judging things to be irrational) simply doesn't understand all of the costs and benefits being considered by the consumer. If a researcher doesn't fully understand what motivates a person, how can he consider them "irrational?"

Or it could mean that the economist isn't using the right tool to judge the behavior. I especially dug into the third chapter, on "The Cost of Zero Cost." I think if the author had analyzed that chapter's examples in terms of benefit/cost ratio rather than absolute benefit, then the consumer behavior described would make a lot more sense.

Toward the end of the book, however, the author started digging into topics that did start to cut closer to the irrational, specifically on the topic of dishonesty. Via a variety of experiments the author shows how people's honesty can be nudged this way or that way by exposing them to different conditioning (like being told to think about the Ten Commandments before a test). Or how people are more likely to steal things rather than money, even if the value of the money matches the value of the item being stolen. The book demonstrates how stark economic assessments of cost and benefit can be fundamentally different from the way people actually view the world.

In the end I found this a readable and captivating book. I would recommend it to anyone with an interest in "popular economics", if you will. If you liked "The Undercover Economist" you'll probably like this book too.(less)

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02/29/08

Yulia rated it:

Read in January, 2008

Besides being a prolific researcher, Ariely is a very lucid writer and he's good at explaining the logic behind his study designs and the broader implications of their results. I just find it amusing that MIT classifies him as a behavioral economist when in any other university he'd be a member of the psychology department (like the other academics whose work he cites).

On a somewhat tangential note, he lists the Ten Commandments in an appendix (after noting a study on how listing ...more

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11/29/08

Steven rated it:

bookshelves: economics, non-fiction

Read in December, 2008

recommends it for: anyone with the mildest interest economics or psychology

This is a really interesting and accessible read about behavioral economics. Ariely pokes holes in the economic supposition that all people act in their rational best interest by showing ways in which people consistently make irrational decisions. The book is set up in an easy to understand manner; each chapter poses a simple question about human decision-making, demonstrates that most or all people are irrational in this type of decision with an experiment or two, and then muses about implicati...more

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11/07/08

Jackie "the Librarian" rated it:

bookshelves: non-fiction

Read in November, 2008

Another book that looks at human behavior, and how we don't behave logically even when we are sure we do. This follows the same well-worn path of Sway, Freakonomics, and Blink, and after having read those, there wasn't a lot new here.
Yes, humans see credit differently than cash. Ariely uses that premise to show how easy it is for companies such as Enron to steal vast sums without feeling the same as a mugger taking money from an old lady's purse, despite the end result being the same.
...more

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10/22/08

Anthony rated it:

bookshelves: law-school-procrastination

Has a copy to sell/swap — Read in October, 2008

recommended to Anthony by: npr
recommends it for: everyone. seriously.

This is the best book I've read all week (never mind that it's the only book I've read this week). While not philosophy, it should be required for all philosophers who talk about rationality and agency, as well as social scientists, and for that matter everyone. Ariely gives concise and clear descriptions of his experiments going back several years, and extrapolates general forces affecting our choices and motivations. These vary from findings that basically prove what should be common sense (SU...more

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09/20/08

Mary rated it:

Read in September, 2008

This book was somewhat entertaining, but I can't really recommend it. The author does experiments with college students and beer, and extrapolates this into a world view. Most of his applications are anecdotal.
Here's an example on p. 215: "Iran is another example of a nation stricken by distrust. An Iranian student at MIT told me that business there lacks a platform of trust. Because of this, no one pays in advance, no one offers credit, and no one is willing to take risks. Peopl...more

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07/15/08

Jennifer (JC-S) rated it:

bookshelves: librarybooks

Read in July, 2008

‘Think how hard physics would be if particles could think.’

While it is comforting to know that so many decisions are made on from irrational bases, it is discomforting to be made quite so aware of it. No, I take that back: it is quite reassuring to know that while the principles of logic have their place, people are influenced by other factors.
Professor Ariely explains some of the factors that influence our decisionmaking: from the influence of emotions to the sometimes a...more

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07/04/08

Greg rated it:

Read in July, 2008

Here are just a few tidbit's I've learned:

-If you're ever going to a bar, trying to score a little bit of lovin', bring a friend who looks very similar to you - only a little uglier. That way you'll look like the ideal candidate, not just compared to your friend but to everyone else there.

-People are more likely to steal things once removed from cash than cash - ie. the Enron crew who stole millions of dollars from the retirement pensions of little old ladies, but would ...more

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03/18/08

Ryan rated it:

bookshelves: business-economics, non-fiction, psychology

Read in March, 2008

As a social psychologist, I have been trained to scoff at all "behavioral economists" because they often claim to have recently discovered that individuals do not always behave "rationally". Furthermore, they seem to brilliantly deduce that the only way to accurately predict how humans actually behave is to test behavior/decision making empirically. Of course, social psychologists have been doing this for over half a century without much public fanfare or guest spots on "...more

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11/19/08

Jess rated it:

Read in November, 2008

Just finished it Nov. 18th 2008. Great look at how psychology intersects with economics and influences our behavior. We are not rational creatures but studies can predict how we will deviate from expected economic principles.

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03/22/09

Vicki rated it:

bookshelves: business

Read in February, 2009

This is an interesting look at how an individual's decision-making process is often at odds with what is objectively beneficial for him or her. Seems a tad repetitive at times, but the examples and studies outlined are undeniably fascinating and help illuminate factors that producers and marketers need to take into account in approaching a potential audience. This would be a great tandem read with Martin Lindstrom's Buyology, which looks at the brain science underlying human desires and wants....more

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03/01/09

Kwame rated it:

Read in February, 2009

This interesting book adds to the infusion of psychology into the arena of economics aka Behavioral Economics. Through a series of experiments, the author confirms the idea that the assumptions of perfect rationality that standard economics texts make do not always stand. Unlike many who argue that these findings overturn the classical view, I am not at all sure that that assumption is correct because the author still confirms that despite the inability of most people to make quick comparisons a...more

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02/21/09

Peeds rated it:

bookshelves: reviewed

Read in July, 2008

This is a very absorbing book about Behavioral Economics by Dan Ariely that makes you wonder if you really think rationally when making choices. It is about how “decoys” are used by merchants to confuse you about your choices, and how you would typically react to them. This book gives you numerous examples that show how we can be influenced to make irrational decisions in making choices such as buying magazine subscription, a DVD player, or a house. There are many experiments that the autho...more

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01/22/09

Marius rated it:

Read in January, 2009

Excellent book by an MIT professor describing various experiments in the field of behavioral economics. This field attempts to give some practical insights into why classical economics fails to reliably predict marketplace behavior; further, he argues that these irrational tendencies are predictable and measurable parts of human nature with far reaching consequences for interpersonal relations, commercial choices and public policy. Written in a very accessible style which allows the reader to ge...more

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05/25/09

Steven Peterson rated it:

Read in June, 2008

Anyone who believes that humans are rational cost-benefit calculators, as per the economic perspective on human decision-making, needs to read this book. It adds to a recent body of literature, including Gigerenzer's "Gut Feelings," Fine's "A Mind of Its Own," Tavris and Aronson's "Mistakes Were Made (But not by Me"), and Gladwell's "Blink." So, this book, per se, does not really break new ground. However, it does make a contribution to the larger discus...more Anyone who believes that humans are rational cost-benefit calculators, as per the economic perspective on human decision-making, needs to read this book. It adds to a recent body of literature, including Gigerenzer's "Gut Feelings," Fine's "A Mind of Its Own," Tavris and Aronson's "Mistakes Were Made (But not by Me"), and Gladwell's "Blink." So, this book, per se, does not really break new ground. However, it does make a contribution to the larger discussion.

The book addresses what the author refers to as one view of human nature (Page xix), "the rational economic model. . . " (For a simple discussion of expectations from the economics view of human nature, see the discussion on pages 64-65). In contrast, this book takes a different--and far more accurate view--of human nature. Dan Ariely says that (Page xix): ". . .this book is about human irrationality--about our distance from perfection." To the extent that government policy and the economic sphere accept the standard view of human rationality, they are basing decisions on an erroneous view of human nature. Will swift and certain punishment deter crime? If people are rational economic calculators, yes. If not? Forget about it. It's phony baloney. That's what is at stake with this book.

The book covers a number of relevant topics as to how humans make decisions. We overweigh negative consequences, we make foolish decisions based on whether or not something is labeled as "free," social norms will often trump cost-benefit calculations, how anchoring of choices skews our decision-making, and so on. One of the nice features of this book is the outlining of various experiments that the author and his colleagues have carried out.

He concludes that (Page 243): ". . .we are pawns in a game whose forces we largely fail to comprehend." A second lesson? Understand that key point and learn how to make decisions given our departure from the rational decision-making orientation. As the author says (Page 244): "Once we understand when and where we may make erroneous decisions, we can try to be more vigilant, force ourselves to think differently about those decisions, or use technology to overcome our inherent shortcomings."

In one sense, being critical of how we make decisions is a bit wrongheaded. That's how people are. Shortcomings? Sure, but that's where we are and that's who we are. And, as Gigerenzer suggests, our flawed decision-making may actually, through the long evolutionary history of our species, do as well or better than economic models of decision-making. So, this is another useful work raising questions about the nature of human nature--and making us more human in the process.
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05/11/09

Karen rated it:

Read in May, 2009

I got a lot out of this book. I read it with the current economic collapse and my undergraduate degree in economics (mostly forgotten) in mind. I would not say that all of this is radical thinking; economists know that people do not behave the way their models require them to behave. However, the freshness in this book (for me) comes from the analysis of how that "irrationality" can actually be rationally predicted and measured. While some of the studies seem to present old news, t...more I got a lot out of this book. I read it with the current economic collapse and my undergraduate degree in economics (mostly forgotten) in mind. I would not say that all of this is radical thinking; economists know that people do not behave the way their models require them to behave. However, the freshness in this book (for me) comes from the analysis of how that "irrationality" can actually be rationally predicted and measured. While some of the studies seem to present old news, there were a few aha moments for me: your best bet in going to a singles bar is to bring along a friend who is similar to you, yet slightly less attractive, because we will always choose the better of 2 items we can actually compare. In other words, if you are relatively attractive and your wing man is hideous, the prey will move onto someone else, because she can't compare you and your wing man and pick between you; you're not easily comparable. (OK, this is a stretch conclusion, but the study is intriguing.) Another interesting tidbit is how people's motivations change depending on whether they feel they are in social or economic contracts. A company that sometimes treats employees like there is a social contract (salaried, blackberries, expectation of extra hours to get a job done, etc) will have employees that expect to not be fired on a whim, to receive good benefits, etc. If the company starts moving towards economic contract attitudes - layoffs, benefit cuts, etc - they can expect to receive much less out of their employees. A good example, not in the book but that the author blogged about recently, was how insulting it was to bankers to be made to work for $500K; many bankers probably would have worked for free if asked, to help the country recover from the financial crisis, (i.e., a social contract), but $500K was just an insult.
I recommend this to just about anyone and especially those with an interest in economics or who work for large companies. It is a quick and fascinating read.
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