Sunday, April 27, 2008

Predictably Irrational
Sunday, April 27th, 2008
The Hidden Forces that Shape Our Decisions, Dan Ariely, (HarperCollins).
Dan reveals the predictable if irrational behavior of individuals, including such subjects as listed below (regrettably, any inaccuracy in the discussion is my interpretation and error). Even the author finds himself falling victim to the irrational behavior, even as he observes it happening, it is still at time not possible to alter your own actions. (This echoes Nassim Taleb’s observation in his book “Fooled by Randomness” where he says, it would be nice if your actions could be different, once you know how you can be fooled - he was not optimistic that this new knowledge would actually alter the reader’s behavior — “Delivering advice assumes that our cognitive apparatus rather than our emotional machinery exerts some meaningful control over our actions.” ). What a funny person.
Some of the main categories:
relative nature of value and perceived value (human beings assess value in relative terms, almost never in absolute terms)
the high cost of zero cost (free !) (the difference between “drop from two cents to one cent” and “drop from one cent to none” puts the latter in an entirely separate category of evaluation. It’s almost impossible to resist the idea of “free”
social norms vs market norms (people do things requiring great effort and time and expense, for free, which they will refuse to do if you offered to pay them ! unbelievable ? it’s true !)
social norms require cooperation to live in the village, and we do things for each other without payment
companies would like to establish loyalty of their employees, and try to establish the social relationship “we’re a big happy family !” but destroy that illusion by their behavior (your health care deductibles are $2000 higher this year).
once the social norm is converted to market norms, everything becomes a business transaction - want me to help with your rock wall? pay me $15/hr !
or we can just take care of each other’s pets without money changing hands, because it’s “neighborly”.
the cost (price?) of ownership
keeping options open is irresistable and costly
the need for uniqueness (don’t be last to order in the restaurant !!)
honesty and character (lots of stuff to cover, and uncover, about human behavior, if individuals are given opportunity to cheat…) - some people are simply not surprised to hear some of the results… has ongoing discussions
search youtube for “Dan Ariely” -
Chapter 1:
Chapter 4:
(it’s easier to just watch the video, no?)

No comments: