Predictably Irrational: Great Book By Dan Ariely

There have been a lot of books written since Daniel Kahneman and Amos Tversky's Nobel Prize winning work on the limits of human decision-making, the problems such drawbacks cause, and the steps that people can take to overcome such limits.  Max Bazerman's  Judgment in Managerial  Decision Making is still among the best, and although it is textbook-like, I find it engaging and useful. But there is a new champ in this space. I am just about done with Dan Ariely's Predictably Irrational: Hidden Forces The Shape Our Decisions.  Ariely not leads us through one fascinating study after another -- such as research that shows why a 1 cent aspirin won't get rid of a headache but a 50 cent aspirin will and a host of other studies that show why we waste money, underestimate risks, and procrastinate.  He also shows throughout the book how to overcome or avoid these biases, and for me, the real clincher is that his writing style and charming personality kept me turning pages quickly and smiling throughout.  He takes study after study and translates them in an engaging manner, but never distorts the message.  This is one of those books that is on par with the Heath Brothers Made to Stick, Robert Cialdini's Influence, and Malcolm Gladwell's Tipping Point.  If you want to learn about behavioral economics, Predictably Irrational is the best place I know to start -- although Bazerman's book is a more useful reference it is more systematic and comprehensive (and it is well-written).

P.S. A lot of people seem to have a similar opinion of Ariely's new book -- it is currently #13 overall at Amazon.

Comments

[John Bradley Jackson]

Dan Ariely misses the point.

It seems that we live in a thankless world and this void seems most pronounced in day-to-day business. The ever increasing pace of commerce in the new millennium seems to leave little time for a thank you or even common courtesy. Global competitiveness seems to have sapped us of empathy and compassion. Yes, this is a cynical view of business today but I fear it is true.

It is my opinion that we are mired in a deep dark thankless funk that rivals the world of Ebenezer Scrooge from Dickens lore.

For example, advertising is overwhelmingly negative. Charles Schwab, a brokerage company without analysts, ran ads a few years ago showing other brokers to be commission-hungry con artists, pushing a bad stock; in the advertisement a full commission broker joked about “putting lipstick on that pig.” The pressure of controversy seems to have gotten the better of them (i.e. Schwab). Although Merrill Lynch was shown by New York City prosecutors to have very similar internal email conversations, CBS, thinking it too controversial, refused to run the ad. (The ClickZ Network).

One only has to turn to YouTube or most anywhere on the web to read the smear campaigns that tear down political candidates in our 2008 Presidential primaries. Barack Obama is a victim of a Republican smear campaign which spread false information about his family history, religion, and background using a false Wikipedia citation. This is an example of negative advertising at its best with lies included. Regretfully, this negative viral message spread like crazy, misinforming thousands of readers.

Presuming that you buy into my harsh view of current affairs in the world, what should you do? I suggest that you do the opposite. Greet the world by saying thank you to your customers, colleagues, suppliers, and competitors. Be different than the rest and look for the good in things and be grateful. At the very least, it will make you feel better. I can only imagine the shock on people’s faces when you greet them cheerfully and express good tidings.

William Arthur Ward said that “Feeling gratitude and not expressing it is like wrapping a present and not giving it.” Give the gift of your gratitude. Give often.

John Bradley Jackson
Author: First, Best, or Different

[Wally Bock]

When I was coming up in business, the advice was to take all the emotions out of your decision making. But it seems like a better strategy is to be aware that emotions will be part of anything human and that you should be aware of how they affect your decision making, then combine intuition with a disciplined use of system.

[michael webster]

Bob, I wrote a short review of the interaction between chapter 1 and chapter 8 that your readers might like.

Here: http://www.bizop.ca/blog2/mind-brain-and-decisions/why_do_you_buy_crap_that_you_d.html

I agree this this is one of the most informative books on behavioral economics.