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Lunch » Tags » Books » Reviews » Predictably Irrational: The Hidden Forces That Shape Our Decisions » User review

A book about economics that's fun and interesting - yes, really!

  • Mar 24, 2008
  • by
Rating:
+5
Classical 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 engaging overview of this fascinating subject. If you are the kind of person (like me) who can't imagine using the words 'fascinating' and 'economics' in the same sentence, don't worry, the primary focus of the book is human behavior and its peculiarities, rather than economic theory. In particular, the author is concerned with elucidating how and why people continue to engage in behavior patterns that are detrimental in the long term.

In thirteen well-written chapters, Ariely considers such topics as:

* The effect of our need for a reference point before we can judge the value of something, and how clever marketers can exploit this
* How we can become trapped by our own behavior - the importance of first decisions
* How the prospect of getting something free can override reason and logic (is it really smart to wait for free-entrance night at the museum?)
* The effect of social norms (why you are more likely to agree to help your local charity by working for nothing, than for a quarter of your normal professional rate)
* The influence of arousal (we behave irrationally in the throes of passion - what you can do about it)
* The problems of procrastination and self-control
* Our tendency to place too much value on what we already own
* The destructive consequences of people's tendency to want to keep as many options open for as long as possible
* How our expectations of something can actually influence our ability to enjoy it
* The power of price (response to a $2.50 placebo is better than that to a 10c placebo)
* In what situations are people particularly likely to behave dishonestly? How can the triggers for dishonest behavior be disarmed?

The book is based primarily on work that Ariely has done with colleagues at M.I.T. and elsewhere. Two features make the book exceptional, in my opinion:

1. The ability of Ariely and colleagues to devise really neat experiments to test their hypotheses. All of the conclusions in the book are convincingly supported by often remarkably clever experiments. Even in cases where you might not agree completely with Ariely's conclusions, the experiments are described clearly enough and in sufficient detail to allow you to draw your own conclusions.
2. Ariely does an extraordinary job of making his material interesting and accessible to a general audience. The book was a joy to read.

I highly recommend "Predictably Irrational".

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More Predictably Irrational: The Hi... reviews
Quick Tip by . July 21, 2010
Good things to keep in mind for business world. Interesting read.
Quick Tip by . June 12, 2010
Lots of fun- dense, but worth the effort
review by . October 29, 2009
Many decisions that we make in our daily lives seem quite irrational when analyzed dispassionately and coolly in terms of whether those decisions make any economic sense or are they beneficial to us in some other way. And yet, those irrational decisions are not completely random, but there is some reason to their madness. The part of psychology that deals with this "irrationality" in marketplace is referred to as behavioral economics, and this research field has had a great impact on our understanding …
review by . April 30, 2009
Did you ever stop to think why your behavior can be so doggone irrational at times? Perhaps you are someone who walks into a fast food joint and orders a bacon double-cheeseburger, large fries and a Diet Coke.  Now does that make any sense at all?  Do you regret that recent purchase when a salesperson managed to talk you into a product that was much bigger and had many more features than you wanted or needed?  Do you have drawers full of so-called "free" stuff at home that …
review by . March 14, 2009
This is an enjoyable introduction by one of the leading experts in the field of behavioral economics, one who's conducted many of the most well-known experiments. It covers those experiments with humor and ease. If you haven't already read overlapping books like Nudge and Malcolm Gladwell's outstanding pop-psych trilogy, then I'd recommend this book in a heartbeat.    On the other hand, there is nothing truly new here. It doesn't have the freshness that books like Freakonomics …
review by . November 13, 2008
Predictably Irrational
The book is an easy read, has entertaining experiments, and his writing style makes this a book that's hard to put down.    Some of the ideas he tackles in his book are:  -people don't know what they want until they see it in context.  -price decoys and how the mind evaluates value based on these decoys  -when we see "Free", it never really is free  -social versus market norms(e.g., why giving a gift of cash is offensive vesus a nice bottle …
review by . October 05, 2008
Blame Malcolm Gladwell - but after Blink: The Power of Thinking Without Thinking social psychologists of the type he featured in that book have been coming out of the woodwork to publish in the pop science market in alarming numbers figuring, reasonably enough, that there's a bit of money to be made on the side. I'm guessing royalties from articles in the International Journal of Psychology would pale in comparison.    One of the latest is Dan Ariely, whose unique selling point …
review by . September 16, 2008
At first glance, the title of Dan Ariely's book seems to be an oxymoron. (It certainly catches one's attention.) Can irrational thought and/or behavior be predicted? Perhaps if it is repetitive? (The judgment and behavior of at least some people can be repetitive and thus predictable.) So I began to read his book with curiosity but also, yes, with some skepticism. Here are a few of my reactions. First, he learned a number of "lessons" from what he calls "experiments" in his life, each of which struck …
review by . April 30, 2008
Would you take a pencil from work? How about a quarter from the petty cash box? Could you tell your favorite beer from ordinary swill? Why is "buy one, get one free" more effective than "half off"? Why does the pension-fund raider go free while the ATM thief goes to jail?    Ariely, professor of Behavioral Economics at MIT, explores these and other snappy, intriguing questions, and designs clever experiments to test his ideas on people - mostly students at MIT and Berkeley. From …
review by . April 14, 2008
There has been a wave of books recently on human behavior and some aspects of economics. They range from the absurd and clearly opportunistic (Blink: The Power of Thinking Without Thinking) to the thoughtful and very informative (Freakonomics [Revised and Expanded]: A Rogue Economist Explores the Hidden Side of Everything).     Dan Ariely is a behavorial economist at MIT. From his descriptions throughout the book, it sounds like a great job: try to figure out why people do what …
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Wiki

Dan Ariely, a professor of behavior ecnonomics at MIT's Sloan Schoool of Management, is a master at explaining how emotions, relativity, and social norms play into our decision making processes.  Predictably irrational brings to light behavioral economics in the everyday world by shedding light onto irrational behavior in a way that helps you to understand the underlying influences for the decisions we make.
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Details

ISBN-10: 006135323X (hbk.)
ISBN-13: 9780061353239 (hbk.)
Author: Dan Ariely
Genre: Behavioral Economics, Consumer Behavior, Decision-Making, Reasoning, Social Psychology & Interactions, Batteries, Cognitive Psychology, Cognitive Science
Publisher: HarperCollins
Date Published: February 19, 2008
ISBN: 006135323X
Format: Hard Cover
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