Predictably Irrational: The Hidden Forces that Shape Our Decisions [Paperback]

'For anyone interested in marketing - either as a practioner or victim - this is unmissable reading. If only more researchers could write like this, the world would be a better place.' Financial Times

‘A marvelous book that is both thought provoking and highly entertaining, ranging from the power of placebos to the pleasures of Pepsi. Ariely unmasks the subtle but powerful tricks that our minds play on us, and shows us how we can prevent being fooled.’ Jerome Groopman, New York Times bestselling author of How Doctors Think

‘PREDICTABLY IRRATIONAL is wildly original. It shows why—much more often than we usually care to admit—humans make foolish, and sometimes disastrous, mistakes. Ariely not only gives us a great read; he also makes us much wiser.’ George Akerlof, Nobel Laureate in Economics, 2001 Koshland Professor of Economics, University of California at Berkeley

"The most difficult part of investing is managing your emotions. Dan explains why that is so challenging for all of us, and how recognizing your built-in biases can help you avoid common mistakes." --This text refers to an out of print or unavailable edition of this title.

"A marvelous book that is both thought-provoking and highly entertaining, ranging from the power of placebos to the pleasures of Pepsi. Ariely unmasks the subtle but powerful tricks that our minds play on us, and shows us how we can prevent being fooled." --This text refers to an out of print or unavailable edition of this title.

Why do smart people make irrational decisions every day? The answers will surprise you. Predictably Irrational is an intriguing, witty and utterly original look at why we all make illogical decisions.

Why can a 50p aspirin do what a 5p aspirin can't? If an item is "free" it must be a bargain, right? Why is everything relative, even when it shouldn't be? How do our expectations influence our actual opinions and decisions?

In this astounding book, behavioural economist Dan Ariely cuts to the heart of our strange behaviour, demonstrating how irrationality often supplants rational thought and that the reason for this is embedded in the very structure of our minds.

Predicatably Irrational brilliantly blends everyday experiences with a series of illuminating and often surprising experiments, that will change your understanding of human behaviour. And, by recognising these patterns, Ariely shows that we can make better decisions in business, in matters of collective welfare, and in our everyday lives from drinking coffee to losing weight, buying a car to choosing a romantic partner.

If the behaviours that skew our judgements were random or senseless, we'd be hard put to sort them out and make better decisions. But as the research described in this book shows, our irrationalities are, in fact, systematic. People will make the same types of mistakes over and over, in a predictive manner, because the causes of these behaviours are embedded in the very structure of our minds. This is why recognizing these mistakes and understanding them offers us a way to do better.

And that's the aim of this book: to leave the reader with new knowledge of human nature derived from a wide range of scientific experiments and findings, knowledge that will help all of us make better decisions in our personal life, our business life, and in the choices we all need to make about our collective welfare. --This text refers to an out of print or unavailable edition of this title.

An intelligent, lively, humorous and thoroughly engaging look at why we often make illogical decisions - a must-have for fans of 'Freakonomics' and 'Blink'.

Why does headache pain persist after taking an asprin that costs 1p, but disappear after swallowing a pill that costs 50 times that amount? Why does recalling the Ten Commandments reduce our tendency to lie? Why, after extensive research on a particular car model, can a random meeting with someone who expresses a negative opinion on the car change our decision to buy? Why do we make choices contrary to our better judgement? And what exactly is "better judgement"?

In this astounding book, behavioural economist Dan Ariely cuts to the heart of our strange behaviour. In 'Predictably Irrational' he demonstrates how irrationality often supplants rational thought - especially when we most 'need to be level-headed' - and explains why. --This text refers to an out of print or unavailable edition of this title.

Dan Ariely is the Alfred P. Sloan Professor of Behavioral Economics at MIT. His work has been featured in leading scholarly journals as well as a variety of popular media outlets, including the New York Times, Wall Street Journal, Washington Post, Boston Globe, Business 2.0, Scientific American, and Science. He has also been featured on CNN and National Public Radio. Dan publishes widely in the leading scholarly journals in economics, psychology, and business. His work has been featured in a variety of media including The New York Times, Wall Street Journal, Washington Post, Boston Globe, Business 2.0, Scientific American, Science and CNN. He splits his time between Princeton, NJ, and Cambridge, MA.

Excerpted from Chapter 2 - The Fallacy of Supply and Demand
Consider this: if I asked you for the last two digits of your social security number (mine are 79), then asked you whether you would pay this number in dollars (for me this would be $79) for a particular bottle of Côtes du Rhône 1998, would the mere suggestion of that number influence how much you would be willing to spend on wine? Sounds preposterous, doesn't it? Well, wait until you see what happened to a group of MBA students at MIT a few years ago.

"Now here we have a nice Côtes du Rhône Jaboulet Parallel," said Drazen Prelec, a professor at MIT's Sloan School of Management, as he lifted a bottle admiringly. "It's a 1998."

At the time, sitting before him were the 55 students from his marketing research class. On this day, Drazen, George Loewenstein (a professor at Carnegie Mellon University), and I would have an unusual request for this group of future marketing pros. We would ask them to jot down the last two digits of their social security numbers and tell us whether they would pay this amount for a number of products, including the bottle of wine. Then, we would ask them to actually bid on these items in an auction. What were we trying to prove? The existence of what we called arbitrary coherence. The basic idea of arbitrary coherence is this: although initial prices are "arbitrary," once those prices are established in our minds they will shape not only present prices but also future prices (this makes them "coherent"). So, would thinking about one's social security number be enough to create an anchor? And would that initial anchor have a long-term influence? That's what we wanted to see.

"For those of you who don't know much about wines," Drazen continued, "this bottle received eighty- six points from Wine Spectator. It has the flavor of red berry, mocha, and black chocolate; it's a medium- bodied, medium- intensity, nicely balanced red, and it makes for delightful drinking." Drazen held up another bottle. This was a Hermitage Jaboulet La Chapelle, 1996, with a 92- point rating from the Wine Advocate magazine. "The finest La Chapelle since 1990," Drazen intoned, while the students looked up curiously. "Only 8,100 cases made . . ."

In turn, Drazen held up four other items: a cordless trackball (TrackMan Marble FX by Logitech); a cordless keyboard and mouse (iTouch by Logitech); a design book (The Perfect Package: How to Add Value through Graphic Design); and a one- pound box of Belgian chocolates by Neuhaus.

Drazen passed out forms that listed all the items. "Now I want you to write the last two digits of your social security number at the top of the page," he instructed. "And then write them again next to each of the items in the form of a price. In other words, if the last two digits are twenty- three, write twenty- three dollars."

"Now when you're finished with that," he added, "I want you to indicate on your sheets-with a simple yes or no- whether you would pay that amount for each of the products."

When the students had finished answering yes or no to each item, Drazen asked them to write down the maximum amount they were willing to pay for each of the products (their bids). Once they had written down their bids, the students passed the sheets up to me and I entered their responses into my laptop and announced the winners. One by one the student who had made the highest bid for each of the products would step up to the front of the class, pay for the product, and take it with them.

The students enjoyed this class exercise, but when I asked them if they felt that writing down the last two digits of their social security numbers had influenced their final bids, they quickly dismissed my suggestion. No way!

When I got back to my office, I analyzed the data. Did the digits from the social security numbers serve as anchors? Remarkably, they did: the students with the highest- ending social security digits (from 80 to 99) bid highest, while those with the lowest- ending numbers (1 to 20) bid lowest. The top 20 percent, for instance, bid an average of $56 for the cordless keyboard; the bottom 20 percent bid an average of $16. In the end, we could see that students with social security numbers ending in the upper 20 percent placed bids that were 216 to 346 percent higher than those of the students with social security numbers ending in the lowest 20 percent. --This text refers to an out of print or unavailable edition of this title.