Predictably Irrational: The Hidden Forces That Shape Our Decisions

by Dan Ariely

flexible, concerned,

and willing to pitch in.

America’s productivity depends increasingly on the talent and efforts of its workers.

social norms—pride in their

profession and a sense of duty—that will motivate them to give up their lives and health.

mission is worth more than his base pay—that

cash will take you only so far—social norms are the forces that can make a difference in the long run.

Instead of focusing the attention of the teachers, parents, and kids on test scores, salaries, and competition, it might be better to instill in all of us a sense of purpose, mission, and pride in education.

gifts are financially inefficient, they are an important social lubricant.

In general, people work for a paycheck, but there are other, intangible benefits we get from our jobs.

for many people the workplace is not just a source of money but also a source of motivation and self-definition.

Employers who can foster these feelings gain dedicated, motivated employees who think about solving job-related problems even after the workday is over. And employees who take pride in their work feel a sense of happiness and purpose.

Explicitly stating the financial value of these benefits can also diminish enjoyment, motivation, and loyalty to the workplace—negatively affecting both the employer-employee relationship and our own pride and happiness at work.

the effect of mixing social and market norms on demand.

when price is not a part of the exchange, we become less selfish maximizers and start caring more about the welfare of others.

Once pollution is a market and companies pay for their right to pollute, morality and concern for the environment are nonissues.

But to make informed decisions we need to somehow experience and understand the emotional state we will be in at the other side of the experience. Learning how to bridge this gap is essential to making some of the important decisions of our lives.

Giving up on our long-term goals for immediate gratification, my friends, is procrastination.

the students generally understood their problem with procrastination and took action to fight it when they were given the opportunity

not everyone understands their tendency to procrastinate, and even those who do recognize their tendency to procrastinate may not understand their problem completely.

although almost everyone has problems with procrastination, those who recognize and admit their weakness are in a better position to utilize available tools for precommitment and by doing so, help themselves overcome it.

best course might be to give people an opportunity to commit up front to their preferred path of action. This approach might not be as effective as the dictatorial treatment, but it can help push us in the right direction (perhaps even more so if we train people to do it, and give them experience in setting their own deadlines).

You put your credit card into a glass of water and put the glass in the freezer.

When we have problems with self-control, sometimes we delay tasks that we should do immediately. But we also exhibit problems with self-control when we attend too frequently to tasks that we should put off—such as obsessively checking our e-mail.

inability to make smart choices and overcome our own self-destructive behaviors.

need to more carefully examine the cases in which we repeatedly fail, and try to come up with some remedies for these situations.

“endowment effect,” we predicted that when we own something—whether

we begin to value it more than other people do.

Much of our life story can be told by describing the ebb and flow of our particular possessions—what we get and what we give up.

we fall in love with what we already have.

we focus on what we may lose, rather than what we may gain.

What we need is to consciously start closing some of our doors.

how could any two parties look at precisely the same event and interpret it as supporting their opposing points of view?

transparency and sacrifice can serve to restore public trust and help a firm set itself on the right path.

proactively addressing consumers’ complaints.

more extreme version of this idea is for companies to make themselves transparent and vulnerable.

honesty, transparency, conscientiousness, and fair dealing should be bedrock corporate principles.

when given the opportunity, many honest people will cheat.

The difference was not the cost of the item, or the fear of getting caught, but people’s ability to justify the item to themselves as a legitimate use of their expense account.

“need for uniqueness.”

people are sometimes willing to sacrifice the pleasure they get from a particular consumption experience in order to project a certain image to others.

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 potential choice.