I have not written any product reviews on Amazon, but I was forced into writing one because of my sincere admiration and new-found respect for Prof. Dan Ariely. I was introduced to the science of Behavioral Economics and the irrational decisions people make in their lives. The author, through his experiments, has an uncanny knack of explaining all the profound concepts in a simple and entertaining manner. The contents in this book will quite literally open your eyes and make you wonder how people are living in this so-called idealistic world of rational decision making. Some of the key ideas presented in this book are:
-> How humans perceive value - "not in absolute terms, but one with respect to another," and this is how companies and marketers deceive people with "seemingly attractive" offers that you cannot resist.
-> Market forces of supply and demand only apply to rational people - in the real world, companies exploit people's irrationality and influence prices and demand.
-> The power of FREE - People are, in essence, losing some other resource in trying to procure FREE items.
-> The wonderful distinction of market and social norms, and why and how they cannot coexist. He also explains how companies can motivate their employees using social benefits, which are cheaper and stronger than financial incentives.
-> As long as money is not involved, we are caring social animals.
-> Why people exhibit different behaviors when they are "normal" (cold state) and when they are "aroused" (hot state). Learning to bridge the gap between the two extreme states is very important and will help you avoid making errors or bad decisions that you will forever regret.
-> The high price of ownership reveals three irrational quirks in human behavior - we are deeply attached to what we have; we often focus on what we may lose (also called Loss Aversion); we assume other people (or buyers of our goods) to also value the goods in the same manner as we do.
-> People's expectations can cloud their thinking, and they use this as a marketing strategy to influence their friends' tastes and preferences.
-> Price is so powerful that it can drive the Placebo Effect - the more the price, the more the utility you derive from the product. This phenomenon was explained with Aspirin - why a 50 cent Aspirin can do what a penny Aspirin can't.
-> Trust is an important public resource and a necessary lubricant of the economy. A few bad players in the market can completely erode it.
-> Why even the most morally upright person can be susceptible to making small crimes that hardly matter. However, a contemplation of moral behavior or a religious code of law before doing any action can greatly reduce the likelihood of people committing these petty crimes.
-> The idea of FREE LUNCHES in behavior economics; the science of economics should be modified to account for how people actually behave instead of how they should behave in society.
These are just some of the important principles explained in the book through experiments and startling revelations. It is easy to read and highly entertaining. However, there is one minor flaw in this book - the concepts and results described are all based on experiments performed on American college students or the western society, which may not be applicable to the more conservative societies in the world.
BOTTOM LINE - Predictably Irrational is a wonderful book with new insights into irrational behavior in people. But for the one criticism, I believe this can change the way people think about economics, and can result in newer norms that account for our actual and not ideal behavior.
PS: For people interested in reading more about behavior and cognitive sciences, I have the following book suggestions:
1. "The Power of Habit: Why We Do What We Do in Life and Business" by Charles Duhigg.
2. "Thinking, Fast and Slow" by Daniel Kahnem.
3. "The Upside of Irrationality" by Dan Ariely.
4. "The Signal and the Noise: Why So Many Predictions Fail -- but Some Don't" by Nate Silver
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Great book, bad purchase experience
It's a great book, recommended by my professor of a class called Decision Making Under Uncertainty. Very inspirational!The reason I can't give it a five-star is because of Amazon. The upper right corner of the front cover is completely folded when it's in the box. I believe it's brand new, but that fold makes the purchasing experience not so pleasant. Of course I won't waste time to exchange it. Hope it will not happen in the future.
Top reviews from other countries
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Javier.Reviewed in Mexico on August 2, 2020
Excelente obra de economía del comportamiento.
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