“Predictably Irrational: The Hidden Forces That Shape Our Decisions” – by Dan Ariely
I just finished listening to the audio version of this book from Audible.com on my Treo680 while commuting. I have started listening to it the second time, all over again. Here is why.
This is a very absorbing book by Dan Ariely that makes you wonder if you really think rationally when making choices. It is about how “decoys” are used by merchants to confuse you about your choices, and how you would typically react to them. I picked this book at Audible, as it was one of the top sellers and the reviews sounded good.
This book is about Behavioral Economics. It gives you numerous examples that show how we can be influenced to make irrational decisions in making choices such as buying magazine subscription, a DVD player, or a house. There are many experiments that the author describes which clearly illustrate how the presence of some choices or information can act like a decoy, blur our judgment, and steer us towards making sub-optimal choices. While traditional economics is based on the premise that people make rational choices, and that the market forces are the result of those, behavioral economics concerns itself in the study of predictably irrational choices that people typically make, and what drives them to do so.
The author uses some interesting examples to explain how mixing “market norms” with “social norms” can severely jeopardize our relationships, and how procrastination is the cause for low rate of retirement savings in the US. There are also some really thought-provoking experiments that show how people are influenced by others’ choices while ordering a meal in a restaurant, and how just the mere suggestion of the Ten Commandments can make people temporarily more honest.
This book has aroused my interest in behavioral economics – a completely new field to me. If you like books that are witty, entertaining and thought-provoking, then this one will amaze you. If you enjoyed “Freakonomics” by Stephen D Levitt and Stephen Dubner, then this is another book for you to read.
Dan Ariely has a blog that is, predictably, mind-boggling.