Title: Predictably Irrational: The hidden forces that shape our decisions
Author: Dan Ariely
Genre: Non-fiction, Behavioural Economics
Published: 2008
BookMarks
Predictably Irrational is a book on a study of human decision making. How most of our decision-making is predictable and can be influenced. And even decisions which may seem irrational and random have common guiding forces.
Following are a few takeaways from the book
- Relativity: Everything is relative, all the choices we make are in comparison with something not chosen. Most people do not know what they want unless they see it in context. Marketing companies use a decoy, similar but obviously inferior, for selling the products they want to sell. We look at our decisions in a relative way and compare them to the available alternative. The more we have the more we want. And the only cure is to break the cycle of relativity.
- Law of Human Action: to make a man covet something more, make it more inaccessible for him (Mark Twain in Tom Sawyer)
- Anchor price decides what price we are willing to pay for any product
- Free has a cost. Anything offered for FREE leads to heavily irrational decisions by the purchasers.
- Social Norms vs Money Norms: People are at times more willing to do something for free or a gift than if they were to be offered money for it
- We procrastinate, delay doing things we know we have to do. Choosing instant gratification over accomplishing something.
- Ownership has a higher price - we overvalue what we have.
- Options are a distraction
- Expectations decide the actual realization
- The pricier something is, more we believe in its efficacy
- More close to actual cash, more honest humans become.
Overall, quite an interesting read. I liked the way the outcomes of the behavioural research have been presented. Probably, the entire book was an experiment in nudging towards enjoying it! After all, as the author says, we humans are predictably irrational.
Previously on BookMarks: The Indian Spy
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