Predictably Irrational by Dan Ariely


Dan Ariely is a behavioral economist; he looks at our economic (and other) choices the way a psychologist would.  He has devised countless experiments that demonstrate the choices we make are not rational. 

For example, a group of 100 students is given the following three choices for subscriptions to the Economist:  an online only subscription for $59, a print-only subscription for $125 or a combination online and print version for $125.  Given these three choices, 16 students chose online only, 0 chose print-only, and 84 chose the combination version.  If you remove the decoy (which no one chose), the numbers change so that 68 chose the online only and 32 chose the combination version. So, the clever Economist publishers only had to give us a decoy to get a significant number of people to pay more to receive a print version.  We are so dumb (or irrational as Dan Ariely would say)!

Here's an experiment that shows another way we are very suggestible.  Asian-American women are divided into two groups and each group takes an objective math exam.  Before taking the exam, the women in one group are asked questions related to their gender such as questions about preferences relating to co-ed dorms.  The second group is asked questions related to their race, such as the languages they knew and their family's history in the U.S.  The results of the two groups matched the stereotypes of each group.  Those whose questions reminded them they are women did worse than those who were reminded they are Asian-Americans.

I never tired of these great stories that illustrate various points so well, but if I had, then I could enjoy other amazing bits in this book.  Below is a quote from a 17th century recipe for a cure-all medication that relates to a section on placebo effect:

Take the fresh corpse of a red-haired, uninjured, unblemished man, 24 years old and killed no more than one day before, preferably by hanging, breaking on the wheel or impaling….Leave it one day and one night in the light of the sun and the moon, then cut into shreds or rough strips.  Sprinkle on a little powder of myrr and aloes, to prevent it from being too bitter.

Another great story involves attracting someone of interest romantically.  Because we are drawn to making comparisons, as illustrated by the Economist story, if you plan to meet a man in a bar, it's a good idea to take along a friend who is not quite as attractive as you are.  In a follow up to the initial publishing of this book, he adds an important moral he learned from the daughter of a colleague who used this technique to her advantage, but told the decoy friend one night when she had had a few too many drinks:

Never, ever tell your friend why you're asking him or her to come with you.  Your friend might have suspicions, but for the love of God, don't eliminate all doubt.

He says that rational economists base their models on a false premise.  The rational economic model assumes that man is self-interested, calculating and able to weigh the costs and benefits to optimize the outcome.  Once you've read this book, you are keenly aware that is not the case. 

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