Predictably Irrational: The Hidden Forces That Shape Our Decisions

Predictably Irrational The Hidden Forces That Shape Our Decisions by Dan Ariely (based on 163 customer reviews)

(Hardcover)
Author: Dan Ariely
Publisher: HarperCollins

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167 out of 191 people found the following review helpful.
Review Date: 2/19/08

Welcome to the fuzzy world of being human.

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 experiements 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 pocketed that conference pen, tweaked their numbers on a tax claim, 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.

92 out of 121 people found the following review helpful.
Review Date: 3/29/08

Almost Did Not Buy, Reviews Too Negative--This Was Worth My Time

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.

37 out of 45 people found the following review helpful.
Review Date: 2/19/08

Exploring why so much of what we do doesn't make sense

I had the privilege of taking Dan's class at Duke last fall, where all of us got the chance to read preview copies of Predictably Irrational. Of course, not everyone will get the chance to hear Dan's excellent lectures, but the book does a great job of capturing his wit while providing a wealth of information about why human behavior can be as fallible as it is.

The joy in this material lies in the fact that every few pages you will find yourself smiling because you too have behaved in the irrational manner being described, and now that you look back on it, it's hard to remember why.

Why are we so excited about free stuff, even if we just throw it out later? Do we convince ourselves that an expensive meal will taste better than a cheap one? And why are we motivated to act on some humanitarian disasters, but not others? We all make irrational decisions at times, but this book provides the rare opportunity to reflect on those decisions and observe the behavioral patterns underneath.

If you enjoyed Freakonomics or any of Malcolm Gladwell's writings, you will also enjoy Predictably Irrational. The pace is quick, and nearly every page contains some nugget of surprising information that you'll want to tell your friends. It is more like Freakonomics than Blink or The Tipping Point in that it is structured around experiments, with each chapter covering the results of experiments in a specific area of irrational behavior, the implications for society, and what individuals might do to mitigate it.

It's a hard book to put down, and it's both entertaining and interesting from start to finish. For those who are curious about the world, this might be the ultimate beach or airline reading!

13 out of 18 people found the following review helpful.
Review Date: 2/20/08

If you only have a couple of books on decisions, make this one of them

I love this book! It is quickly becoming one of my more frequent sources of quotes for coworkers. I would put it at about #2 of all my favorite books on management and decision making right after How to Measure Anything: Finding the Value of "Intangibles" in Business and just above Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets and The Halo Effect: ... and the Eight Other Business Delusions That Deceive Managers. Like How to Measure Anything, Predictably Irrational offers a fascinating list of sources of weirdness in human decisions, although I prefer the former for more practical advice. It covers odd errors we tend to make when interpreting uncertainty, risks, and choices of various types - especially purchasing decisions and prices. Predictably irrational infuses doubt into our assumption that we "control" our choices but, since our irrationality is predictable, gives hope for improvement. Now, I can't help but to think a bit more deeply about every purchase I make.

3 out of 4 people found the following review helpful.
Review Date: 2/22/08

Enlightening (and Fun!) -- A Must Read!!!

Once in a great while you come across a book that truly enlightens! A book that helps you to better understand yourself and the others in a "Gee whiz, I can't believe I didn't see this before when it was all right in front of my eyes!" Dan Ariely's, Predictably Irrational is just such a book!

We all believe that our knowledge and experience guides us to make logical and "rational" choices based on the value we place on various options. Do I buy A or B? Should I be honest or cheat? Should I keep my options open or focus on one thing? Life is a daily stream of cost-benefit analyses.

But, what if our understanding of value is abitrary? What if our understanding of value can be manipulated? Surely, intelligent people (ourselves included, of course) cannot fall victim to arbitrary or manipulated notions of value. Guess what? Ariely lays bare our often skewed understanding of value and the irrational decisions that arise from basing decisions on such skewed information.

Be warned, once you open the book and start reading, you won't be able to put it down! And, Ariely doesn't leave you with some dry understanding of behavioral economics -- no! Like that sinful dessert, where you eat the whole thing when you only meant to take a bite, Predicatably Irrational offers bite-after-bite of enlightening and dare I say "entertaining" insights into human behavior. Even better, Ariely leaves your mind racing with practicle ideas on how to overcome our irrational tendencies with an eye on improving the human condition.

Another reviewer mentioned that Ariely is a person you'd love to have at your dinner party -- so true! Having met him on one of the first stops of his book tour in the DC area, his ideas not-only challenge you to rethink your understanding of value, but point you forward on how you can make life better!

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