Sundarrajk's Weblog

Archive for the ‘Irrational Humans’ Category

Predictably Irrational: The Hidden Forces That Shape Our DecisionsPredictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely
My rating: 4 of 5 stars

It is hard to accept that we humans are irrational. Most of us pride our rationality in the decisions that we take. Most of our theories are also based on the fact that humans are rational.

In the book, the author, debunks this “myth”. The author through various examples proves that we are actually irrational in many scenarios and predictably so. It give one goosebumps to read the examples that the author quotes and most should be able to relate to the scenarios presented.

One key message that the author gives in the book is that we are all suckers for something free. We lose our rationality when we see something coming for free. We end up buying something that we do not need.

The second point is that although all of us consider ourselves to be upright and honest, it is true only to a certain extent. Most of us tend to cheat when it does not involve stealing cash. Some examples that the author quotes is taking stationery from the office for personal use, or using official mobile, phone for personal calls. Using official vehicle for personal travel. Even claiming medical bills, cooked up with the help of a medical store (specifically in India) or claiming travel more than one actually spent. All of this is justified in one form or the other by us.

The third point that the author makes is that we cannot compare the value of items which do not share common qualities. E.g. when deciding on a vacation, the only common point is the hotel. The vistas and experience that one would get in the different locations is hard to compare and evaluate for our minds. So we end up taking a vacation which is more driven by the freebies that come with the hotel rather than what we will experience at the location.

The fourth point is that we succumb to buying things which have scarcity. We end up buying things which are scarce or are expected to go scarce even though we may have no need for it.

The fifth observation is that there are many things which we may do as a favour, but will avoid if we are paid for it. When our neighbour asks for our help to move his furniture we will help him. But if she offers us money for doing the same, we may refuse or at least refuse the money. The expectation is that they will repay us in kind sometime in the future.

The sixth observation is that we lose control of our mind when are emotionally charged. The emotion could be anger, sadness, frustration, or sexual arousal. Our rationality goes out of the window if we take decisions under these conditions. The phrase “blind anger” is justified.

The seventh observation is that once we possess an item we attribute a lot of attractive characteristics to it and tend to overvalue it. Even if we do not actually own but are set on owning something we tend to overvalue it. As a result when we sell anything we tend to expect much more than its worth as a seller and as buyer we tend to undervalue as we do not own it as yet. This is the constant conflict that the buyers and sellers face.

The eight point that the author makes is that an “a priori” knowledge will bias our choices.

Another shocking observation is that people tend to “feel cured” if they pay a higher price for the treatment or medicine as compared to if they pay less for the same treatment or medicine.

All in all the author concludes that we are not as rational as we think ourselves to be.

View all my reviews