Laura's Reviews > Predictably Irrational: The Hidden Forces That Shape Our Decisions

Predictably Irrational by Dan Ariely
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Feb 10, 12

bookshelves: economics, nonfiction, read-2012, brain
Read from January 24 to February 10, 2012

There’s a generalization that people make that really gets me. It’s the idea that people naturally prefer or practice competition over collaboration or cooperation. Usually this is said as a way to dismiss addressing inequalities in America and to explain why capitalism is the only choice. Socialism or any hybrid economic system is doomed. Doomed! There are several reasons the acceptance of individual competition over striving for the group’s overall well-being seems to be a social norm rather than an innate human trait. And even if it was an innate human trait, I believe we can rise above it. While working together is a shared value in my family, living in Japan showed me it could be a bigger social norm. There are other reasons I question the all-out assumption that competition trumps collaboration, but let’s go with those two.

When I picked up Predictably Irrational, I was worried that the book was going to give me absolute arguments similar to the one I outlined above. It’s the way it is because people practice it that way. Instead, I believe if I brought this observation to Ariely he would say something like: Why do you think that is? How are the innate human traits reinforced by society to make something more commonly practiced?

Ariely describes his interest in understanding people's behavior in groups based on a fire accident. Ariely suffered third degree burns from an explosion. The recovery period isolated Ariely. And that isolation brought him a new perception of people. I believe that it can also happen when you live in another country. Living in Japan, I frequently felt separate from those around me. And while my feelings of isolation were not as deep as Ariely, there were many occasions where I felt like I was observing people around me with new eyes. In other words, I take Ariely to be the kind of person who could acknowledge that people are both competitive and collaborative. And he would be equally interested in what social norms brought out one behavior more so than the other.

That said – his tests (usually of MIT, Harvard or Stanford students) often left me with more questions. For example when given three choices – with one being a decoy choice – 75% of students took the bait and chose the one researchers wanted them to choose. And I would think – what’s happening with that other 25%. Because in my mind – 25% is still a lot of people. What were they thinking?

Another section discusses how people see themselves as mostly honest. When given the opportunity to cheat, they mostly self-regulate even with intentional leeway to cheat more and not get caught. However the further people are from money the more likely they are to cheat. For example, if you take an expense account and have a procedure of receipts and involve another person (an assistant who submits them), these buffers (from the actual cash) lead to a situation where people are more likely to cheat on their expense accounts.
In July 2010, my house was flooded. I experienced five feet of water in my basement. FEMA and then later the SBA visited me. And there was a procedure much like Ariely describes. If anything, I underestimated the cost of the damages. This may be because I was warned that if I was found to be lying, I would have to return the money. But at several times I was encouraged to really be sure that I was certain of my reporting because the estimate could go down, but it could never go up. And I should include things that could later be taken out. Perhaps those conversations were a bit like signing an honesty code. However, I do the same thing – underreport my expenses – with my expense account at work. Perhaps that's just me being part of the (figurative) 25%.

What I appreciate about Ariely’s presentation of research is that he doesn't box himself into saying this is the way humans behave. Rather – if you consider these conditions – asking people to sign an honor code – you encourage this kind of behavior – greater rates of honesty.
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Comments (showing 1-2 of 2) (2 new)

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Laura Thanks Bob.
I consider the idea that corporations are people as possibly the biggest problem the US currently has. Life, Inc. sounds like it will help me fully think through my assumption. Thank for the heads up on the book.


Lombe An easy read thats helpful in getting one to have a clue of economic theory without getting lost.


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