Predictably Irrational: The Hidden Forces That Shape Our Decisions » (Revised)

Dan Ariely is the James B. Duke Professor of Behavioral Economics at Duke University, with appointments at the Fuqua School of Business, the Center for Cognitive Neuroscience, and the Department of Economics. He is also the founder of the Center for Advanced Hindsight and a visiting professor at MIT's Media Lab. Over the years he has won numerous scientific awards. Dan wrote this book while he was a fellow at the Institute for Advance Study at Princeton.

A challenging mate to Freakonomics, Predictably Irrational examines how the world often works according to principles of irrationality in the places where we least expect it.

Do you know why you still have a headache after taking a one-cent aspirin, but why that same headache disappears if the aspirin costs fifty cents? Do you know why recalling the Ten Commandments reduces people s tendency to lie, or why honor codes are actually effective in reducing dishonesty at the workplace? Do you know why, after doing careful and extensive research on which car to buy, a random meeting with someone who had an awful experience with that car changes your decision? Why do we make decisions contrary to our better judgment? What is better judgment?

Predictably Irrational challenges us to ponder these questions (questions we sometimes avoid) and demonstrates how irrationality manifests itself in situations (often very peculiar and hilarious situations) where rational thought is expected. We all succumb to irrationality, it s about time we find out how it affects our daily lives in a significant way. In this astounding new book, groundbreaking in scope and totally original, Dan Ariely cuts to the heart of our strange behaviors and presents outstanding material that will keep every reader transfixed.

Predictably Irrational comes from Dr. Ariely s work as a behavioral economist, but it s not for economists. Well, it is, but mainly to the extent that it can help them the same way it can help anyone. If the behaviors that skew our judgments were random or senseless, we d be hard put to sort them out and make better decisions. But research has shown that our irrationality is, in fact, systematic. People will make the same types of mistakes over and over, in a predictable manner, because the behaviors have structural origins. So recognizing them and understanding them offers us a way to do better. And that s the aim of this book: to leave you with new knowledge of human nature, derived from a wide range of scientific experiments and findings, that will help you make better decisions in your personal life, your business life, and in the choices we all need to make about our collective welfare.

The Barnes & Noble Review

A few years ago, Dan Ariely, an economist at MIT, noted something odd in the subscription rates for the British newsmagazine The Economist. You could take the first option, costing $59, and get a year of full access to their web site. The second, costing $125, would get you a year-long print subscription. And the last, also costing $125, would get you a year of both the print subscription and the online access.

Huh?

Introduction How an Injury Led Me to Irrationality and to the Research Described Here

Ch. 1 The Truth about Relativity: Why Everything Is Relative - Even When It Shouldn't Be 1

Ch. 2 The Fallacy of Supply and Demand: Why the Price of Pearls - and Everything Else - Is Up in the Air 23

Ch. 3 The Cost of Zero Cost: Why We Often Pay Too Much When We Pay Nothing 49

Ch. 4 The Cost of Social Norms: Why We Are Happy to Do Things, but Not When We Are Paid to Do Them 67

Ch. 5 The Influence of Arousal: Why Hot Is Much Hotter Than We Realize 89

Ch. 6 The Problem of Procrastination and Self-Control: Why We Can't Make Ourselves Do What We Want to Do 109

Ch. 7 The High Price of Ownership: Why We Overvalue What We Have 127

Ch. 8 Keeping Doors Open: Why Options Distract Us from Our Main Objective 139

Ch. 9 The Effect of Expectations: Why the Mind Gets What It Expects 155

Ch. 10 The Power of Price: Why a 50-Cent Aspirin Can Do What a Penny Aspirin Can't 173

Ch. 11 The Context of Our Character, Part I: Why We Are Dishonest, and What We Can Do about It 195

Ch. 12 The Context of Our Character, Part II: Why Dealing with Cash Makes Us More Honest 217

Ch. 13 Beer and Free Lunches: What Is Behavioral Economics, and Where Are the Free Lunches? 231

Reflections and Anecdotes about Some of the Chapters 245

Thoughts about the Subprime Mortgage Crisis and Its Consequences 279

Thanks 331

List of Collaborators 335

Notes 341

Bibliography and Additional Readings 345

Index 355