Predictably Irrational
Dan Ariely
“We are pawns in a game whose forces we largely fail to comprehend
What I like
Lots of really interesting findings that I enjoyed mulling over between chapters
I love the studies and examples that are used to reinforce points, many of them are creative and fun and interestingly designed
Each chapter felt salient and easy to read, it’s a well-written book
What’s missing
Limitations on the findings external validity. Most studies were run with college students at prestigious universities.
To the same point of what’s above, I would have liked to understand how the findings in this book can be applied more broadly.
Key Topics
Bias, Decision-Making, Economics, Value, Self-Control, Expectations
Review
This is a book that has lingered around the “Top X Books Designers Should Read” lists for a long time and it has been recommended to me time and time again. I find books like this most interesting because they blend Psychology with Business and Design. There are a lot of implications in this book for how to leverage irrational human behaviors to build decision support systems, such as pricing models, or how to design a restaurant experience. Dan Ariely shares a lot about his story in this book, which I found to be inspiring, and interesting as a part of what contributed to his journey for writing this book.
Predictably Irrational dives into the details of the hidden forces that sometimes make human beings make irrational decision. Perhaps it’s favoring an undesirable product more favorably than necessary, choosing a meal that they otherwise would not pick at a restaurant, lying cheating or stealing when one wouldn’t typically do so, or leaving money on the table due to lack of trust. Dan Ariely elaborates on the differences between conventional and behavioral economics by sharing scenarios that conventional economics cannot rationalize, particularly involving people making irrational decisions due to hidden forces that shape their actions. Each chapter contains a reflection at the end outlining implications for various theories and how to apply them in our day-to-day lives or professions. I appreciate the Ariely conducted most of the studies referenced in this book and enjoyed hearing about the design of his studies. My only concern is that most of the studies in this book were run with particularly intelligent college students attending prestigious universities. Either way, the findings are very interesting and oftentimes unexpected, which made the book fun to read.
The point I took away from this book is simply that people make decisions irrationally, and that expecting people to make rational in a designed system is unrealistic. In one context people might behave one way, and in a slightly similar context they might behave another. Someone’s decision-making while eating with friends will be different than if they are eating alone. Someone’s value of a product will be one thing if they have nothing to compare it to versus when they can compare it to another thing in their environment. Some big insights I kept thinking to myself while reading this book are “expectations in environment”, or, the decision-making that we make is largely shaped by our expectations within the environment that we are in. Our expectations are shaped by associations, and our environment is typically shaped by ourselves, nature, or a designer.
You should definitely read this book if, like me, you are interested in the cross-sections of Psychology, Economics, Business, and Design.
Learnings
Relativity is the process by which we make comparisons about things relative to other similar things in our environment or in our mind to form judgements.
Anchoring is the process by which we base our judgments about something based on our first interaction with it- otherwise known as imprinting.
The number zero, or “free” in economic terms, has implications for making people value things irrationally.
When determining value we typically look at market and social norms, which do not necessarily mix well.
There are two major laws to demand: that when price decreases demand increases, and when price decreases people are more likely to buy multiple of something.
It has been shown and proven that people are more likely to make irrational decisions when in an aroused state.
People are unlikely to exhibit self control when there is a short term positive outcome, even when rationally it would make sense to forego it to obtain a long-term positive outcome.
We irrationally place more value on something we own or possess than someone is willing to pay for something, and place more value on having options than applying focus.
Expectations play a powerful role in how we experience the world, as expectations of something positive will typically yield a positive experience.
The placebo effect plays a huge role in behavior when the placebo sets expectations both in marketing and price.
Trust is an important factor that plays with how we interact with brands and markets in general and it generally has two rules: People will generally forgive a little bit of lying, and once you lose trust it is very hard to get back.
When people are given the opportunity to cheat, they are more likely to cheat a little than a lot, and will cheat less if real cash money is involved as opposed to a token or another non-currency item.
In certain public settings people are more likely to trade their enjoyment or something for the need to be unique.