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Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions Paperback – Illustrated, April 27, 2010
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Enhance your purchase
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Print length384 pages
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LanguageEnglish
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Publication dateApril 27, 2010
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Dimensions5.31 x 0.86 x 8 inches
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ISBN-109780061353246
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ISBN-13978-0061353246
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Editorial Reviews
Review
“Sly and lucid. . . . Predictably Irrational is a far more revolutionary book than its unthreatening manner lets on.” -- New York Times Book Review
“Surprisingly entertaining. . . . Easy to read. . . . Ariely’s book makes economics and the strange happenings of the human mind fun.” -- USA Today
“A fascinating romp through the science of decision-making that unmasks the ways that emotions, social norms, expectations, and context lead us astray.” -- Time magazine
“In creative ways, author Dan Ariely puts rationality to the test. . . . New experiments and optimistic ideas tumble out of him, like water from a fountain.” -- Boston Globe
“An entertaining tour of the many ways people act against their best interests, drawing on Ariely’s own ingeniously designed experiments. . . . Personal and accessible.” -- BusinessWeek
“Ariely’s book addresses some weighty issues . . . with an unexpected dash of humor.” -- Entertainment Weekly
“Inventive. . . . An accessible account. . . . Ariely is a more than capable storyteller . . . If only more researchers could write like this, the world would be a better place.” -- Financial Times
“Ariely’s intelligent, exuberant style and thought-provoking arguments make for a fascinating, eye-opening read.” -- Publishers Weekly
“A taxonomy of financial folly.” -- The New Yorker
“A marvelous book that is both thought provoking and highly entertaining, ranging from the power of placebos to the pleasures of Pepsi. Ariely unmasks the subtle but powerful tricks that our minds play on us, and shows us how we can prevent being fooled.” -- Jerome Groopman, New York Times bestselling author of How Doctors Think
“Dan Ariely is a genius at understanding human behavior: no economist does a better job of uncovering and explaining the hidden reasons for the weird ways we act, in the marketplace and out. PREDICTABLY IRRATIONAL will reshape the way you see the world, and yourself, for good.” -- James Surowiecki, author of The Wisdom of Crowds
“PREDICTABLY IRRATIONAL is a charmer-filled with clever experiments, engaging ideas, and delightful anecdotes. Dan Ariely is a wise and amusing guide to the foibles, errors, and bloopers of everyday decision-making.” -- Daniel Gilbert, Professor of Psychology, Harvard University and author of Stumbling on Happiness
“The most difficult part of investing is managing your emotions. Dan explains why that is so challenging for all of us, and how recognizing your built-in biases can help you avoid common mistakes.” -- Charles Schwab, Chairman and CEO, The Charles Schwab Corporation
“PREDICTABLY IRRATIONAL is wildly original. It shows why―much more often than we usually care to admit―humans make foolish, and sometimes disastrous, mistakes. Ariely not only gives us a great read; he also makes us much wiser.” -- George Akerlof, Nobel Laureate in Economics, 2001 Koshland Professor of Economics, University of California at Berkeley
“Dan Ariely’s ingenious experiments explore deeply how our economic behavior is influenced by irrational forces and social norms. In a charmingly informal style that makes it accessible to a wide audience, PREDICTABLY IRRATIONAL provides a standing criticism to the explanatory power of rational egotistic choice.” -- Kenneth Arrow, Nobel Prize in Economics 1972, Professor of Economics Stanford University
“A delightfully brilliant guide to our irrationality―and how to overcome it―in the marketplace and everyplace.” -- Geoffrey Moore, author of Crossing the Chasm and Dealing with Darwin
“After reading this book, you will understand the decisions you make in an entirely new way.” -- Nicholas Negroponte, founder of MIT's Media Lab and founder and chairman of the One Laptop per Child non-profit association
“PREDICTABLY IRRATIONAL is a scientific but imminently readable and decidedly insightful look into why we do what we do every day...and why, even though we ‘know better,’ we may never change.” -- Wenda Harris Millard, President, Media, Martha Stewart Living Omnimedia
“Predictably Irrational is an important book. Full of valuable and entertaining insights that will make an impact on your business, professional, and personal life.” -- Jack M Greenberg, Chairman, Western Union Company, Retired Chairman and CEO, McDonald's Corporation
“Predictably Irrational is clever, playful,humorous, hard hitting, insightful, and consistently fun and exciting to read.” -- Paul Slovic, Founder and President, Decision Research
“Freakonomics held that people respond to incentives, perhaps in undesirable ways, but always rationally. Dan Ariely shows you how people are deeply irrational, and predictably so.” -- Chip Heath, Co-Author, Made to Stick, Professor, Stanford Graduate School of Business
From the Back Cover
Why do our headaches persist after we take a one-cent aspirin but disappear when we take a fifty-cent aspirin?
Why do we splurge on a lavish meal but cut coupons to save twenty-five cents on a can of soup?
When it comes to making decisions in our lives, we think we're making smart, rational choices. But are we?
In this newly revised and expanded edition of the groundbreaking New York Times bestseller, Dan Ariely refutes the common assumption that we behave in fundamentally rational ways. From drinking coffee to losing weight, from buying a car to choosing a romantic partner, we consistently overpay, underestimate, and procrastinate. Yet these misguided behaviors are neither random nor senseless. They're systematic and predictable—making us predictably irrational.
About the Author
Dan Ariely is the bestselling author of Predictably Irrational, The Upside of Irrationality, and The (Honest) Truth About Dishonesty. He is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University and is the founder of the Center for Advanced Hindsight. His work has been featured in the New York Times, the Wall Street Journal, the Washington Post, the Boston Globe, and elsewhere. He lives in North Carolina with his family.
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Product details
- ASIN : 0061353248
- Publisher : Harper Perennial; Revised and Expanded ed. edition (April 27, 2010)
- Language : English
- Paperback : 384 pages
- ISBN-10 : 9780061353246
- ISBN-13 : 978-0061353246
- Item Weight : 10.1 ounces
- Dimensions : 5.31 x 0.86 x 8 inches
-
Best Sellers Rank:
#10,781 in Books (See Top 100 in Books)
- #21 in Marketing & Consumer Behavior
- #43 in Popular Culture in Social Sciences
- #50 in Medical Cognitive Psychology
- Customer Reviews:
Customer reviews
Top reviews from the United States
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There are some very interesting anecdotes (for example, do you know why we think black pearls are valuable when originally no one wanted to buy them at any price?) and these are where most of the book's value lies.
The principal weakness comes from Ariely's conclusions based on the work he's carried out. He acknowledges that we humans are "irrational" compared to the straw man of the "rational optimizer" beloved of neoclassical economic theory, but while some of his examples are interesting he fails to see the entire picture. Thus whereas Keen shows that the neoclassical model is computationally impossible, Ariely merely shows that we have different decision-making processes in two distinct contexts: interpersonal and financial. This is valid, but Ariely then goes on to show that he hasn't really explored the interpersonal context with any degree of rigor.
A couple of examples will illustrate what I mean. In the first example Ariely talks about how companies strive to create a "social exchange" in the workplace because people generally work harder and more diligently in social exchange settings than in compensation-based settings. We can think of how we might keep on struggling to get a friend's piano up the stairs of a narrow apartment building long after we'd have given up if we were simply being paid $10 per hour by a stranger to perform the same task. So Ariely notes that companies try to exploit our social side in order to get more work out of us (he doesn't look at the ethics of this attempt, or even at its many infeasibilities). Then he suggests that in order to reinforce the social dynamic and avoid corrupting it with the financial dynamic (because it's not possible to combine the two) companies should not give bonuses but instead should send employees off on a paid-for vacation. The problem, of course, is that most employees don't want to be placed in a parent-child relationship. Most employees think of themselves as independent adults. Saying "here's a vacation we've arranged for you" violates an employee's independence. Worse still it assumes the employee's plans for their free time are irrelevant (the cost of leaving one's home, family, and friends for the duration of the enforced vacation are apparently zero where the company is concerned...). Obviously this recommendation would be disastrous under real-world conditions and one wonders how Ariely failed to think through his proposal.
A second example of this failure to think things through comes with Ariely's analysis of cap-and-trade. Rightly he points out that when you set a price on something (in this case pollution) then people may elect to pay more in order to get more. Just as we might only take a single candy from a tray being passed around the group but might buy ten if the candies are being sold, so too might companies pollute less if pollution were a "social good" rather than a priced good. With cap-and-trade companies might simply elect to pay more in order to feel free to pollute more. So Ariely proposes making pollution a "social good." But again a moment's thought shows this to be absurd. Not only do we have far too many examples of companies being quite happy to pollute when it's a cost-free exercise, Ariely's own book shows that executives will ignore social factors when their focus in on financial rewards. As executives are almost exclusively motivated by fat financial rewards, the notion that they would take social norms into account when deciding whether or not (or how much) to pollute is like saying that investment bankers would put the needs of their clients and the financial system in general ahead of their own desire for the $100 million bonus they get from pushing CDOs onto unsuspecting dupes.
So in the end the book is worth reading for its anecdotal value but not for Ariely's own conclusions or policy suggestions. He's not-quite an economist and not-quite a behavioral psychologist and ultimately that means he's not-quite useful as a guide to policy formulation on either the micro or the macro scales.
So, how is this different from TFS. While both the books are on the subject of Behavioral Economics, hower, Dan has kept the topics brief and discussions to the point, so that the interest is sustained. While he would have conducted innumerable number of experiments in course of the research, he has only referred to a select few in this book. And whatever his criteria for selection was, it was pretty good, as it kept the interest of the readers on. I would prefer it over TFS
A brief overview of the interesting concepts in this book, which can of good use in product and pricing decisions are:
Relativity – to make a line look smaller (or a product affordable), draw a bigger line next to it (or a more expensive model). You need not really put an effort to sell the expensive model, but it gives a relative idea. The important thing is that the products should be comparable, as human mind cannot function with incomparables.
Anchoring – Daniel had labored on this a lot in his book TFS. For a consumer to make a purchase, an appropriate anchor is important, which could be even the MRP. So, low MRP does not necessarily help to sell. The interesting revelation was that “ our first decisions resonate over a long sequence of decisions”!! So, get the customer first. Of course, one can de-anchor (don’t know if there is a word like that), for which uncomparable variants need to be introduced (Starbucks case ) and for which its own MRP becomes the anchor
Reaction to price changes : It lasts only as long as the memory of the old price persists, demand soon normalizes
Zero cost : Free is a powerful tool, although expensive to the consumer ( Woody Allens quote that “The most expensive sex is free sex” is so apt, although that was quoted more from the social norms context). So, make the consumers buy something for nothing. Add freebies for upselling, nothing much new about it. But using FREE! to drive social policies is interesting.
Social norms : Very powerful, but cuts both ways. Once a social norm it established, bringing in market norm will destroy it forever (the example of late pickup being charged at day care is a perfect example). Keep sending small gifts to the customer , they will yield good returns.
Influence of arousal : Frankly, not of much use in commercial, but was quite astounded to read and the experiment was an eye opener.
Price of ownership or endowment effect: Giving an option of refund if not satisfied is a very powerful hook in durable segment, as the endowment effect generally inhibits any urge to return.
Keeping doors open : This concept is quite detailed out in the book Paradox of Choice by Barry Schwartz. Too many options only destroy value
Effect of expectation and power of price : When we believe something beforehand that something will be good, it generally will be good an vice versa. So, manage your customer expectation. A high price only enhances the expectation
The continuum message is that human beings are mere pawns in a game whose forces they largely fail to comprehend. And that is where behavioral economics will be a strong feed into marketing – making sure that consumers make the right choice!!
I'm a financial professional and use his tricks and tools to guide my clients to wise financial decisions. But honestly, this book is a tool for life.
The social experiements he conducted involve daily things, and you'll find yourself referring back to his advice again and again.
I truly believe this book should be required reading for every kid leaving home. It's that important and that 'equipping'. So yes, buy this book. But two. You're going to want to share, but you won't want to give yours away.
Top reviews from other countries
GET THIS BOOK. That's it.
A BRILLIANT read. Irrespective of what you do, you must read this textbook of human behaviour & how amazingly complex our minds are decisions are.
A sample of what's inside:
Consider an experiment on 100 students based on an old subscription model of The Economist magazine, offering:
Option 1 - a web subscription for $59
Option 2 - a print subscription for $125
Option 3 - a web & print subscription for $125
16 students chose Option 1
0 students chose Option 2 (obvious!!)
84 students chose Option 3.
Revenue earned = $11,444.
The author then removed Option 2 (Print sub for $125) Results:
68 students chose Option 1
32 students went for Option 3Revenue earned = $8,012
What could have possibly changed their minds? It was the mere presence of THE DECOY (2nd option) that made them buy MORE expensive options in the 1st experiment & less in the 2nd experiment.
The book is replete with such experiments. Also, real-life examples of human behaviour when it comes to product pricing (including 'anchoring'), buying houses, cheating, Starbucks Upsells, what Ford learned from Toyota about Car servicing and too many brilliant quotes.
Reviewed in India on August 11, 2019
GET THIS BOOK. That's it.
A BRILLIANT read. Irrespective of what you do, you must read this textbook of human behaviour & how amazingly complex our minds are decisions are.
A sample of what's inside:
Consider an experiment on 100 students based on an old subscription model of The Economist magazine, offering:
Option 1 - a web subscription for $59
Option 2 - a print subscription for $125
Option 3 - a web & print subscription for $125
16 students chose Option 1
0 students chose Option 2 (obvious!!)
84 students chose Option 3.
Revenue earned = $11,444.
The author then removed Option 2 (Print sub for $125) Results:
68 students chose Option 1
32 students went for Option 3Revenue earned = $8,012
What could have possibly changed their minds? It was the mere presence of THE DECOY (2nd option) that made them buy MORE expensive options in the 1st experiment & less in the 2nd experiment.
The book is replete with such experiments. Also, real-life examples of human behaviour when it comes to product pricing (including 'anchoring'), buying houses, cheating, Starbucks Upsells, what Ford learned from Toyota about Car servicing and too many brilliant quotes.
Although people aren’t rational, they aren’t randomly irrational, either. Instead, they are predictably irrational, in a way that can be studied and measured, and be built into a more realistic economic theory: behavioural economics.
Dan Ariely, psychologist and behavioural economist, engagingly describes a range of experiments he and his colleagues has performed (mostly on undergraduate students, in the time-honoured experimental psychology manner) to unpick a wide range patterns of irrationality. He looks at the over-strong lure of free items, how we overvalue our possessions, how keeping options open can be a mistake, why shops will often display an expensive option they don’t expect to sell, why we are happy to do things for free we wouldn’t do if paid for, how more expensive items are more effective than identical cheaper ones, how dishonesty varies when cash is involved, how some people choose second best, and more.
I found the chapter on free work versus paid work interesting, the difference being between social norms and market norms. The world is moving us towards the latter, seemingly to the detriment of enjoyment. Similarly the chapter on honesty highlights how people are more honest when cash is involved: while taking a pencil from work is barely noticed, taking the equivalent value in cash would be beyond the pale. Yet we are moving towards a cashless world, maybe to the detriment of honesty?
This is a good read, with the experiments clearly described, and the context and consequences well explained. I am not entirely convinced that the experimental situations, with their small values and low consequences, can be safely extrapolated to larger scale cases, but they are very illuminating. Several of the examples will be useful to help avoid faulty reasoning in certain cases. (Although I already order what I want from the menu, whether or not someone else in the party has previously ordered the same.)
In one of the amazing studies in the book he shows for instance that the way we ‘frame’ something (p. 41) often determines how others are going to take it (remember Tom Sawyer and how he got his friends to paint that wall? For classroom management purposes, this is crucial; if we introduce activities saying ‘Now, this may hurt a little...’ chances are students are going to feel the pain!)
This leads to the hugely important subject – expectations: quick Q: would you like a beer with a drop of balsamic vinegar in it? (p. 159) A: It depends on whether you know it in advance or not! If you do, chances are you are going to dislike it. Expectations colour perceptions. How many times has this prejudiced us against certain students?
Ariely’s interests range from beverages to education. Here is another Q for you: which students have better results: those who are free to choose their own deadlines, or those where the professor ‘democratically’ decides for everyone? Incredibly, it is the latter! (p. 115) This finding may go against our cherished beliefs, but in fact it ties in very smoothly with notions of ‘ego depletion’ (Baumeister). The very process of deciding exhausts us, with the result that we are both more stressed and produce poorer-quality work.
Ariely writes in the simple, effortless and straightforward style that you find among people with a real command of their subject. Rather than bombarding the reader with studies and facts, he goes through each experiment in detail, ensuring that the reader manages to grasp the key concept in all its fine details. He then goes on to consider the possible applications of the findings in various fields of life – not just work. Yet what I like best about this book is that he also uses examples from his own life – sometimes funny, sometimes poignant.
OK – now here is one last idea from the book: a little ‘conjuring trick’ for shamelessly manipulating students (pp 9 – 10): You give them a choice for homework: they can read a long article or they can write a short essay. But you really want them to write that essay. Piece of cake – you give them a third option; writing an even longer text! Now, nobody is going to choose that, right? Yes, but because the short essay is better than the long one, students also assume it’s preferable to the article too! Brilliant!! :-)
Reviewed in the United Kingdom on July 14, 2016
In one of the amazing studies in the book he shows for instance that the way we ‘frame’ something (p. 41) often determines how others are going to take it (remember Tom Sawyer and how he got his friends to paint that wall? For classroom management purposes, this is crucial; if we introduce activities saying ‘Now, this may hurt a little...’ chances are students are going to feel the pain!)
This leads to the hugely important subject – expectations: quick Q: would you like a beer with a drop of balsamic vinegar in it? (p. 159) A: It depends on whether you know it in advance or not! If you do, chances are you are going to dislike it. Expectations colour perceptions. How many times has this prejudiced us against certain students?
Ariely’s interests range from beverages to education. Here is another Q for you: which students have better results: those who are free to choose their own deadlines, or those where the professor ‘democratically’ decides for everyone? Incredibly, it is the latter! (p. 115) This finding may go against our cherished beliefs, but in fact it ties in very smoothly with notions of ‘ego depletion’ (Baumeister). The very process of deciding exhausts us, with the result that we are both more stressed and produce poorer-quality work.
Ariely writes in the simple, effortless and straightforward style that you find among people with a real command of their subject. Rather than bombarding the reader with studies and facts, he goes through each experiment in detail, ensuring that the reader manages to grasp the key concept in all its fine details. He then goes on to consider the possible applications of the findings in various fields of life – not just work. Yet what I like best about this book is that he also uses examples from his own life – sometimes funny, sometimes poignant.
OK – now here is one last idea from the book: a little ‘conjuring trick’ for shamelessly manipulating students (pp 9 – 10): You give them a choice for homework: they can read a long article or they can write a short essay. But you really want them to write that essay. Piece of cake – you give them a third option; writing an even longer text! Now, nobody is going to choose that, right? Yes, but because the short essay is better than the long one, students also assume it’s preferable to the article too! Brilliant!! :-)
NOTE: Please do not remove your head and look inside for comparative purposes.
In all seriousness, this book blew me away, by demonstrating aspects of human behaviour which is hard-wired into us. You will be shocked - I was - by just how easy we can be manipulated, and you'll be nodding along as you recognise all the times when you've fallen foul of these precise conditions. Even wondered why it takes you an hour to decide between brands of painkillers, when one is cheaper but the other is on special...? If you have, then man up and stick a plaster on it. But also, read this book, because it will tell you exactly why you find it so damn difficult to make that choice. It won't help you the next time you've got a pounding headache and Nurofen is half-off but still twice the price of ADSA's own bran paracetamol, but at least then you'll understand. And if your head explodes, and covers passers-by in pinky, drippy bits, try and have a look before you expire - I reckon it'll look just like this cover.












