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Predictably Irrational: The Hidden Forces That Shape Our Decisions | 
 enlarge | Author: Dan Ariely
Publisher: HarperCollins
Category: Book
List Price: $25.95
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Rating:  135 reviews
Sales Rank: 174
Format: Roughcut
Media: Hardcover
Pages: 304
Number Of Items: 1
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Dimensions (in): 9.1 x 6 x 1.4
ISBN: 006135323X
Dewey Decimal Number: 153.83
EAN: 9780061353239
Publication Date: February 19, 2008
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| Customer Reviews: Read 130 more reviews...
 Welcome to the fuzzy world of being human. February 19, 2008
D. Stuart (Auckland NZ)
133 out of 166 found this review helpful
Dan Ariely is the guy you'd want at your dinner party. He's witty, smart and also very inclusive - sharing his passion for the way humans tick in a way that makes us feel great about the fact that, rational as we like to think we are, we make bad snap decisions, we cheat and we get ruled by our heart precisely when the facts are screaming "go the other way!" There's a lot in this writing which celebrates our human-ness. Why do we do this?
What Ariely has done here is shift a lot of the thinking developed by such pioneers as Kahneman & Tversky who worked in behavioural economics, and moved it into the everyday sphere. And he's done a great, insightful job. Where the behavioural economists are focused on financial decisions (why we buy high and sell low - and confound the assumptions of the classic economists who assume 'the rational man,) Ariely eschews the technical language and walks us through everyday examples of our often fuzzy and quite irrational decision-making.
The result is utterly engaging - and this easy 300 page read still has academic rigour and strong foundations. Ariely cites many experiments and examples, and shows that we often get things wrong because we frame things the wrong way, mis-judge probabilities, apply heuristic rules of thumb that don't always work, or we just plain let our emotions rule.
We love to think that we're educated, rational and moral. Yet who hasn't overestimated the upside on a sure-fire investment, bought some clothing that we knew was a mistake even as we bought it, or got our wires crossed between work-rules and social rules? This book is fascinating, entertaining and very, very illuminating.
- Recommended for the general public, but I'd urge marketers, market researchers and business people to read this one carefully. Dan provides excellent dinner-party insights, but they apply to our real world and explain why so many poor decisions are made - whether by customers or by the 'rational' business people who make million-dollar decisions.
- Recommended companion book: Nudge: Improving Decisions About Health, Wealth, and Happiness here one of the godfathers of behavioural economics discusses the way we can manage the "choice architecture" in our world.
Almost Did Not Buy, Reviews Too Negative--This Was Worth My Time March 29, 2008
Robert D. Steele (Oakton, VA United States)
84 out of 121 found this review helpful
I almost did not buy this book as I sought to explore the new literature on behavioral and cognitive science. The negative review are too negative. You get from this book what you bring to it in open mindedness, in my opinion.
My truth-teller, off-setting the reality that this is a double-spaced book that inflates 120 pages of thought into 240 pages of easy to digest presentation, is the author's unique provision in the end-notes of both direct references to seminal works that each chapter is based on, with additional references suggested, AND his recognition of 17 collaborators, each with a long paragraph of biographic information. This is in short a worthy work, it was worthy of my time, and I do not agree with those who are dismissive or cavalier about this book.
As with Nudge: Improving Decisions About Health, Wealth, and Happiness and other works of this ilk, they seem to be blessed with an immaculate conception that fails to recognize the work of the 1960's and 1970's (e.g. Herbert Simon, "satisficing," but I no longer mark this down--this is a new generation thinking new thoughts, and I have decided it is too much to expect them to go back more than 20 years.
The opening of the book is impressive. The author was burned on 70% of his body by a magnesium flare, and his probing of his own pain and how the nurse's had settled on fast painful ripping off of the bandages (with no medication.
Key point early in the book: most people don't know what they want until they see it in context. This is one reason I am planning an edited work in 2009 on Cultural Intelligence. As Howard Bloom teaches us in Global Brain: The Evolution of Mass Mind from the Big Bang to the 21st Century, we (and our policy makers) know nothing of "the other," and I have concluded that peace starts in kindergarten and we have to separate the Israelis and the Palestians, and literally baby sit two new generations from birth to the age of 35.
The rest of the book is easy to read, has excellent real-world examples, and each chapter generally ends with a short appendix with real results. This is not a fluff book, it is a serious book that the light reader will mistake for fluff.
+ Relatively and "bracketing" matter (sell what you want by bracketing it with a more expensive option above and a trashy cheap thing below)
+ Decoys matter (e.g. a middle option that makes the "combined option" a "no brainer")
+ Publishing salaries actually sets off ego wars at the top and churn at the bottom that leads to more turnover and more wasteful employees costs.
+ Imprinting is used by the author to explain "anchoring" (e.g. black pearls anchored in setting of most expensive diamonds, this is an example of how the SELLER is setting the price, not the buyer).
+ "Free" is never really free. It can blind rational choice and it can "cost" time, choice, and a higher value that is obscured (e.g. my cotton socks disintegrate within months, whereas the cotton socks I inherited from an earlier era are still lasting forever).
+ HOWEVER, I especially liked the way the author explored "free" as a device for policy furtherance, e.g. make vehicle registration "free" if you own a hybrid car.
+ Social versus market norms are discussed. The author does not discuss Open Money (see my comment for a link to my keytone at Gnomedex) or Yochai Benckler's [[ASIN:0300125771 The Wealth of Networks: How Social Production Transforms Markets and Freedom].
+ I especially like the way the author discussed how the poorly-paid border patrol and coast guard employees have made their own peace with the drug dealers--they have the same understanding the CIA clandestine service has with the KGB and local counter-intelligence services: we do not kill, kidnap, or even embarrass each other, we all just present to bedoing our job and the only people fooled are Congress and the taxpayers. Similar, the drug dealers understand that if they do not shoot to kill, neither will we....
+ One chapter offers a fascinating study on the impact of sexual arousal (a marker for passion). This quote from page 97 is priceless:
"Prevention, protection, conservatism, and morality disappeared completely from the radar screen. They were simply unable to predict the degree to which passion would change them."
+ The author discusses Smart Cards and their ability to impose a restraining influence with emails, I urge one and all to dump their existing ursurous cards and turn to Interra and other similar community-based cards with high social value.
+ We over-value what we own or possess. (I would add, we also over-value credentialing and under-estimate how painfol our rote school system is, which kills creativity by the seventh grade in some of our brightest kids.)
+ Stereotypes influence behavior on both sides of the viewpoint.
+ Placebo effect is real, something the American Medical Association absolutely does not want you to know (see also Alternative Cures: The Most Effective Natural Home Remedies for 160 Health Problems among many excellent works in this area.
+ Options can confuse and divert.
+ There is a pricing effect (very high priced menu item drives folks toward the second most expensive, which they would not have chosen absent the "higher" bracket item)
+ Character costs. USA loses $525 million a year to robberies, and $600 BILLION a year to employee theft (this does not count procrastination and government issues, such as every second IRS employee a complete loser while the others do twice the work).
+ Harvard MBA students participated in a series of tests that conclusively demonstrated that people will cheat if given an opportunity to do so; they will cheat twice as much with "in kind" versus cash opportunities, but they will not cheat "wildly" even if assured of not being caught. See also The Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead
+ Religion DOES have a good moral effect, as do honor codes and reminding people of the Ten Commandments from time to time. See Founding Faith: Providence, Politics, and the Birth of Religious Freedom in America for the Founding Father's deliberate mix of securlar tolerant government with a desire for a strong religious aspect to community for precisely this reason.
I can see how some might feel this book is less than they were expecting, but I do not agree. This book may be well-marketed and not the deep social science research that some buyers might have been hoping for, but I for one find it completely satisfactory and well worth my time. The author's crediting of 17 collaborators, and the unique goodness of the end-notes carry the day with me.
See also
The World Cafe: Shaping Our Futures Through Conversations That Matter
Society's Breakthrough!: Releasing Essential Wisdom and Virtue in All the People
Building a Knowledge-Driven Organization
Collective Intelligence: Creating a Prosperous World at Peace
My earlier lists (the first ten or so out of 70) focus on strategy, intelligence, information, and offer many other pointers to useful books somewhat related to the larger universe of cognitive science and decision support.
A Logical Choice in an Irrational World March 16, 2008
Kevin Hogan (Minnesota)
10 out of 24 found this review helpful
Dan Ariely has assembled a book filled to the brim with wonderful ideas, current research and well timed humor along the way.
Every marketer will be able to leverage the knowledge gained in Predictably Irrational.
The books message will encourage tolerance as we learn that people are inherently irrational and that much of what we do is because of who we are as humans and not the results of our conscious choices.
Ariely combines original research with the continuing trend in decision making research, following in the footsteps of Kahneman and Tversky.
Few have written books that are as clear or accessible as Ariely has here.
Flat out excellent. Pick it up.
Kevin Hogan
Author of The Psychology of Persuasion
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We are not so irrational. But, it is still a great book April 22, 2008
Gaetan Lion
6 out of 7 found this review helpful
This is a very entertaining book. Ariely's research is turning behavioral economics into a "hard" science or at least an empirical one. The minute he comes up with a new hypothesis he also comes up with a way to test it using his MIT students as a social science lab. Many of his experiments and other ones he studied are already classics in social sciences. The experiments where drugs that are expensive are more effective than cheaper ones (even though the actual drug was identical) and wines that are expensive taste better (even though the wine was the same) are already notorious. You probably read about them in Scientific American or Psychology Today.
Ariely starting point is with our dominant sense: vision. He shows how our eyes can be fooled. Depending on how an image is presented we see objects' size and colors differently from what they are. At his website, he shows many more intriguing visual traps. So, if our eyes can be fooled, can our abstract reasoning be tricked too? Do we make judgments assuming we are rational when we are not? Are those irrational behaviors predictable? That's what this book is all about.
Some of his examples are pretty intriguing. People bids for various objects were influenced by the last two digits of their social security number (that they were asked to recall before bidding). This is "price anchoring." His example of the Duke Basketball tickets is baffling. He becomes a middleman buying tickets from ticket owners to resell to others who did not get tickets. He found no takers as the average asking price from ticket sellers was an amazing $2,400 and the bid price from potential buyers was $175. That's a huge bid-ask spread that seems truly irrational. The zero effect is interesting too. We often make poor choices because something is thrown in for free. Ariely smartly connects the zero effect to our wired-in strong loss avoidance. If something is free, we can't possibly loose anything right? We think that way. Ariely uncovers situations where we make bad choices that way. Chapter 8 makes a good case for simplifying our lives and focus on the few things we love and are effective at. Instead, we encumber ourselves by maintaining choices open and reduce our productivity and happiness overall.
His writing on the placebo effect and expectations is excellent. One part I found shocking is when he states the couple of well established surgical operations (a form of bypass surgery and knee arthroscopic surgery) that were tested against placebo (fake surgeries). They showed no benefits. He pondered how many other surgeries would this also be the case for?
Another classic experiment he mentioned related to expectations was the math test taking of American Asian women. When they thought of themselves as Asian they did better than when they thought of themselves as women. So, expectations affect performance.
But some of Ariely's examples may not denote irrationality. When he indicates that when people move from an expensive real estate market to a cheaper one, they spend close to the same amount on their new home vs what they sold their old home for. By doing so, they buy more of a house than they need. The reverse is true too. When moving from a cheap real estate market to an expensive one, people buy much smaller homes and end up being cramped. He calls that irrational. But, people just buy what the sale proceeds of their old house allow. He also states that lawyers will turn down an offer to work for $30 to give legal assistance to the elderly. But, they'll accept to work for free (volunteer). For a lawyer, volunteering generates goodwill within his community. Meanwhile, working for cheap does not. I don't view that as irrational. When people order beer in the U.S. they order different brands to promote their individuality. Meanwhile, in Asia they tend to order the same brand to promote cooperation. But, is it irrational to follow cultural norms?
Even though I don't think we are quite as irrational as Ariely suggests, this is still a fascinating book. You can tell I really enjoyed it. If you found my review interesting you will like it too. I also strongly recommend Scott Plous's The Psychology of Judgment and Decision Making that covers the same topic.
Interesting reflections on being human April 14, 2008
Jerry Saperstein (Evanston, IL USA)
5 out of 9 found this review helpful
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 they do and the economic impact thereof. For example, why do people run across town to save $7 on a $25 item, but shrug their shoulders at saving the same amount on a $450 item? Why does The Economist magazine offer an internet subscription only at $59, a print edition at $125 and a print and internet sub at $125? No, that isn't a typo - the print edition alone and the print and internet subscription combined are offered at the same price. Why? It has to do with the predictably irrational behavior of humans. The emphasis is on predictability.
Ariely covers a range of day-to-day behaviors and provides examples of the power expectations and price, to name a few. As both a bonus and an irritant, Ariely explains the experiments used to verify his conclusions. It's irritating because sometimes the detail tends to be boring, even though Ariely has a pleasant writing style. It is a bonus because many of the experiments are fascinating and, in many cases, amusing, such as the one involving $1,400 worth of beer billed to MIT.
This is fun book. You won't learn all that much that defies commonsense or intuition, but you'll learn a lot about how and why the behavior we take for granted is so predictable. Belongs on your bookshelf right next to "Freakonomics".
Jerry
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