Predictably Irrational: The Hidden Forces That Shape Our Decisions

by Dan Ariely

In other words, the sensitivity we show to price changes might in fact be largely a result of our memory for the prices we have paid in the past and our desire for coherence with our past decisions—not at all a reflection of our true preferences or our level of demand.

I think it's because humans are intrinsically afraid of loss. The real allure of FREE! is tied to this fear.

sufficient to change the way participants behave? In one of the experiments, the participants finished the unscrambling task and were then given a difficult puzzle, in which they had to arrange 12 disks into a square. As the experimenter left the room, he told them that they could come to him if they needed any help. Who do you think asked for help sooner—those who had worked on

is that we fall in love with what we already have.

The second quirk is that we focus on what we may lose, rather than what we may gain.

we assume other people will see the transaction from the same perspective as we do.

OWNERSHIP ALSO HAS what I'd call “peculiarities.” For one, the more work you put into something, the more ownership you begin to feel for

WHEN WE BELIEVE beforehand that something will be good, therefore, it generally will be good—and when we think it will be bad, it will bad. But how deep are these influences?

Exploring the placebo effect in this chapter, we'll see not only that beliefs and expectations affect how we perceive and interpret sights, tastes, and other sensory phenomena, but also that our expectations can affect us by altering our subjective and even objective experiences—sometimes profoundly so.

Thus familiarity may or may not breed contempt, but it definitely breeds expectations.

difference in how we feel? In a series of experiments

SoBe to improve mental functioning, those

Furthermore, if we put a group of “honest” people into a scientifically controlled experiment and tempted them to cheat, would they? Would they compromise their integrity? Just how much would they steal?

Nature, when she formed man for society, endowed him with an original desire to please, and an original aversion to offend his bretheren. She taught him to feel pleasure in their favourable, and pain in their un-favourable regard,”

He said that as we grow up in society, we internalize the social virtues. This internalization leads to the development of the superego.

So we learned that people cheat when they have a chance to do so, but they don't cheat as much as they could.

In other words, when we are removed from any benchmarks of ethical thought, we tend to stray into dishonesty. But if we are reminded of morality at the moment we are tempted, then we are much more likely to be honest.

“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”

We can now add the following thought: it is even more difficult to get a man to understand something when he is dealing with non-monetary currencies.

We can be dishonest without thinking of ourselves as dishonest.

We can steal while our conscience is apparently fast asleep.

“What a piece of work is a man.” In fact, these examples show that we are not noble in reason, not infinite in faculty, and rather weak in apprehension.

Standard economics assumes that we are rational—that we know all the pertinent information about our decisions, that we can calculate the value of the different options we face, and that we are cognitively

unhindered

in weighing the ramifications of each pot...

We usually think of ourselves as sitting in the driver's seat, with ultimate control over the decisions we make and the direction our life takes; but, alas, this perception has more to do with our desires—with how we want to view ourselves

The point is that our visual and decision environments are filtered to us courtesy of our eyes, our ears, our senses of smell and touch, and the master of it all, our brain.

As the Nobel laureate Murray Gell-Mann once said, “Think how hard physics would be if particles could think.”