Book: Predictably Irrational - The Hidden Forces that Shape Our Decisions
Author: Dan Ariely
Publisher: Harper Collins
Pages: 280
Have you ever wondered while browsing through the items at the supermarket or a bookstore, why the prices (like that of this book) always end with the digit '9'? Rs 299, Rs 399, Rs 999, Rs 4,999, etc. Why can't they simply quote a whole number: Rs 300, Rs 400, Rs 1,000 or Rs 5,000? Well the difference is not that of a single rupee but the way we look at that single rupee, argues behavioural economist Dan Ariely in his book Predictably Irrational.
While decision-making is one of the most difficult human activities, you tend to believe that you're making smart, rational choices. But are you? From paying for coffee to losing weight and buying a car to choosing a romantic partner or beer to purchasing a painkiller to going for everything labelled, "Free," Ariely explains how to break through these systematic patterns of thought to make better, more financially sound, decisions.
He tries to explain why you would opt for a print + internet combo-offer for the Economist magazine for $125 instead of just only-print subscription for $125 or even the only-internet subscription for $59. It's all about relativity. No matter what the Ten Commandments advocate ("You shall not covet your neighbour's goods"), people like to compare. Citing conclusions drawn from experiments he conducted on MIT and Harvard students, Ariely reasons that there's more than just plain reason that forms human judgment.
Ariely writes, "... people are susceptible to irrelevant influences from their immediate environment (which we call context effects), irrelevant emotions, shortsightedness, and other forms of irrationality... What good news can accompany this realisation? The good news is that these mistakes also provide opportunities for improvement. If we all make systematic mistakes in our decisions, then why not develop new strategies, tools and methods to help us make better decisions and improve our overall well-being?"
Predictably Irrational comes up with facts that are hard to swallow, let alone digest such as recalling the Ten Commandments may actually help in curbing dishonesty and may help prevent the next Enron-like fraud. The facts make your stomach squirm while you know all along that all that Ariely's saying is true. Worse, it's not even a truth he has uncovered, but something you knew all along while pretended that it simply didn't exist.
Though it does seem similar to other books on behavioural economics such as Malcolm Gladwell's and Freakonomics, Predictably Irrational makes a fascinating read. It has the power to change the way you interact with the world - one small decision at a time - an invaluable tool in a world where rational decisions are hard to come by. The book may seem a little academic, though Ariely, has tried not to make it that way but it certainly has a reach beyond researchers an economists. The Israel-born Ariely strikes a chord in the reader as he shares the tragic circumstances under which he started looking at the world in a different way and later went on to study human behaviour.
Persistent, persuasive and pacy, Predictably Irrational is pleasantly readable.
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