Review: “Predictably Irrational,” Dan Ariely

Pros: Fascinating, sometimes frightening look at irrational human behavior
Cons: Kind of florid in places
Rating: 4.5 out of 5

Visit DanAriely.com for more information.

 

We all like to believe that our choices are rational, that we’ve weighed our options and chosen logically. In Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions, Dan Ariely shows us all of the ways–the oddly predictable ways–in which we make decisions irrationally. I suspect that a lot of people will be sure that this doesn’t apply to them, so I hope you’ll all consider giving this book a read–it could help you to get a better handle on your decision-making, and to make more rational decisions. Not that we’ll ever totally be free of the emotional underpinnings of our decisions, but every little bit of awareness helps.

Ariely includes a fascinating discussion on ‘free!’ and how it affects our buying decisions. That word has a disproportionate affect on our habits, even when it arguably shouldn’t. He includes the details of many experiments, with hard numbers to prove his points. I was also interested by the idea of ‘price anchors’–the initial price that we associate with something strongly affects how we view subsequent alterations in price.

One of my favorite discussions involved ‘market norms’ vs. ‘social norms’. We judge things very differently based on which set of norms we’re applying, and the presence/absence (or even suggestion) of money can cause us to switch which set of norms we’re using. A lawyer might be perfectly willing to donate (free) services to retirees, where he’d be unwilling to provide them with a discount, because the action is judged by an entirely different set of criteria. Where it’s considered nice and appropriate to bring a hostess gift of a bottle of wine to dinner, the host would be insulted if you instead gave them an equivalent amount of money–because you’re taking the transaction out of the realm of social norms and into the realm of market norms. This lesson can be applied to a huge number of interactions, with repercussions, for example, in the world of customer service.

There are so many fascinating, nuanced topics Ariely dives into: procrastination, the placebo effect, pricing, trust as a public resource, dishonesty and cheating. He doesn’t just describe the oddly predictable irrationalities involved in our decision making. He also suggests ways in which we might mitigate effects, promote our awareness of what we’re doing, or even use our irrationalities to our advantage. It can only help to become aware of why we’re doing what we’re doing, and the odd factors that affect or even dictate our choices.

Our irrational behaviors are neither random nor senseless–they are systematic and predictable.

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