- Hardcover: 352 pages
- Publisher: Harper; 1 edition (June 1, 2010)
- Language: English
- ISBN-10: 0061995037
- ASIN: B004NSVE50
- Product Dimensions: 6.1 x 1.1 x 9 inches
- Shipping Weight: 1.2 pounds
- Average Customer Review: 246 customer reviews
- Amazon Best Sellers Rank: #1,360,641 in Books (See Top 100 in Books)
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The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home 1st Edition
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From Publishers Weekly
Ariely (Predictably Irrational) expands his research on behavioral economics to offer a more positive and personal take on human irrationality's implications for life, business, and public policy. After a youthful accident left him badly scarred and facing grueling physical therapy, Ariely's treatment required him to accept temporary pain for long-term benefit—a trade-off so antithetical to normal human behavior that it sparked the author's fascination with why we consistently fail to act in our own best interest. The author, professor of behavioral economics at Duke, leads us through experiments that reveals such idiosyncrasies as the IKEA effect (if you build something, pride and sentimental attachment are likely to give you an inflated sense of its quality) and the Baby Jessica effect (why we respond to one person's suffering but not to the suffering of many). He concludes with prescriptions for how to make real personal and societal changes, and what behavioral patterns we must identify to improve how we love, live, work, innovate, manage, and govern. Self-deprecating humor, an enthusiasm for human eccentricities, and an affable and snappy style make this read an enriching and eye-opening pleasure. (June)
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
In Predictably Irrational (2008), Ariely explored the reasons why human beings frequently put aside common sense and why bad things often happen when they do. Here, in this equally entertaining and clever follow-up, Ariely shows us the other side of the irrationality coin: the beneficial outcomes and pleasant surprises that often arise from irrational behavior. Although pleasant should be taken as a relative term, since the outcomes are not necessarily pleasant for the person who was behaving irrationally. Take, for example, Thomas Edison’s obsession with DC current, and his irrational hatred of AC: trying to prove how dangerous AC was, he inadvertently—with his development of the electric chair—demonstrated to the world how powerful it could be. Ariely is an engaging and efficient writer, amusing us with stories about irrational behavior while staying away from needless technical terminology and bafflegab. Thought-provoking, entertaining, and smart: a winning combination. --David Pitt
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"The experimenter gives one player, the sender, $20 to distribute between himself and another player, the receiver. An egalitarian sender might propose a split of $10 each. A more selfish sender might propose to give the receiver only $1, keeping $19 for himself. If the receiver accepts the deal, the two players collect their shares. If the receiver rejects the deal, both walk away with nothing. Were humans perfectly rational, the receiver would accept whatever is offered: even a dollar is better than nothing, right? Instead, researchers find, receivers will reject an overly lopsided deal, gladly giving up their shares just to punish the stingy senders."
Dr. Ariely's conclusion, that humans are not rational and that "both [participants] walk away with nothing" when the receiver rejects an unfair deal is faulty. A better interpretation of the observed outcome is, when the receiver rejects the deal both participants walk away with no money. Note that no money does not equal nothing. In reality, the capital being negotiated in this experiment is personal power and the payoff is meaningful relationship. However the researchers are not trained to observe or measure personal power as a form of capital and they completely discount meaningful interpersonal relationship as a payoff. These critical explanatory factors have been cropped out of the experimental model by assuming that (1) if a person is rational any amount of money is better than no money at all, regardless of access to other forms of capital, such as personal power and (2) the investigators have assumed that their guinea pigs are following their rules, which state that the only relevant payoff is money. Econometricians would evaluate this model as faulty due to the dreaded missing variable bias.
An alternative interpretation of the ultimate game outcome is: if the receiver rejects the deal, she walks away preserving her option to find someone else to play games with, someone who won't abuse power. She chooses this option because she knows that playing games with fair rules is far more satisfying than playing games with unequal access to the payoff. In the language of economics, the marginal utility of, or preference for, playing fairly is greater than the marginal utility of a short-run, unfair monetary gain (that has no impact on real life anyway because it's an experiment). Does this dynamic seem like it might apply to personal relationships? I think it explains a lot.
There are valid forms of capital other than dollars. However, most classically trained economists don't know this secret of real life. People behave rationally according to perceived assets, monetary and otherwise. Sometimes economists don't know what should be measured to tell a useful story. What surprises me is that a behavioral economist missed the point. The Upside of Irrationality should be filed under fiction.
I have global complaints, like the plodding pace of the writing, the confusing way in which some of the experiments are presented, the odd withholding of information (at one point the author declines to explain the difference between two different auction styles, citing the complexity, but they must have been able to explain each style to the participants in order for the experiment to work), and such. Even if the experiments themselves were done well, this would be a major reason to avoid this book, even for someone doing a thorough reading of the lay-literature of Behavioral Economics.
Then there's some nitpickier complaints, like how the author feels compelled to mention the horrible injury, and arduous healing process, that he suffered years before. While i do understand that this was a major life event for him, and in fact got him started in the field, it's unclear what it adds to the book to mention it every chapter. He's also compelled to mention his other book repeatedly, just in case we missed the fact that this is his second book, even though this one doesn't build on the last one directly.
The major failing of this book, though, is the experiments themselves. And, for reasons of sensationalism and piling on the bandwagon of complaining about the 2008 financial crisis, one of the most flawed experiments leads the book. In short, in an attempt to show that paying financial experts huge bonuses actually harms their efficacy, they show that paying random passers-by huge bonuses for tasks totally unrelated to their actual profession harms their efficacy. There are several marked differences between the experimental subjects and the bankers to whom the author would like to generalize the results (no, i'm not arguing that bankers are 'special' as the author claims his banker friends often do, just that they're businesspeople and random people on the street in India probably aren't, if they're wandering down the street in the middle of the day and have the time to stop and do the experiment). There are several marked differences in the way the bonuses were offered, whether they were expected, how the bonuses related to the tasks, etc. Basically, either the author totally failed to convey how the experiment was actually related to his conclusion, or he took an experiment only tangentially related to the topic and claimed it was related in order to lead his book with a chapter about the 2008 financial crisis.
Other experiments, while less flawed, are just pointless. For example, he showed that if someone's rude to you, you're more likely to take an opportunity to punish them than you would be if they weren't rude to you. (Shocking, i know, but he has the data to back up the claim.)
Another great sin is that the author only rarely follows through on the promise of the subtitle. There are dribs and drabs of comments on how being irrational can be beneficial, but more often it's simply observations that humans aren't, in fact, machines of pure reason that always seek the greatest gain for the least effort. After a few requisite digs at how Rational Economists totally fail to actually predict human behavior, this 'oh, and check that out, people aren't perfectly rational!' mantra gets redundant.
If you like books on Behavioral Economics, read Freakonomics and SuperFreakonomics. They are better written, with better data and better analysis. And if you've already read those two, stay well clear of this one, as you'll find it vapid, slow, frustrating, and poorly written when compared to those.
Ariely is clearly milking the success of his previous book which was well-researched and well-put together. "The Upside" makes an impression that it was written over a weekend in the hope to make a quick buck.
The case studies on human behaviour, a strong point of the previous book, are weird and towards the last chapters of the book they disappear altogether being replaced by Ariely's own subjective experiences which he then interprets as general rules for humankind.
I was really disappointed at some of the laughable conclusions he makes. For example: so poor peasants in India get really nervous if offered an equivalent of a 6-month salary for playing some stupid game well. Not surprising. You would get nervous too. Ariely's conclusion: big bonuses make CEO's less effective. What a ridiculous conclusion.
Next example: when deciding between buying a new kitchen or going on an exotic luxury holiday for the same money, go for the holiday because you will enjoy this experience more. How stupid and also irresponsible to suggest this. I absolutely disagree with this conclusion. Underlying principle he seems to recommend here: don't save just spend.
The final chapters on dating are just laughable, there is no underlying research supporting the claims Ariely makes, just a few personal anecdotes.
This book is not even worth the paper it is printed on and Ariely failed big time to live up to my expectations created by his excellent first book.