Predictably Irrational: The Hidden Forces That Shape Our Decisions
by Dan Ariely

Hardcover, 304pp
Publisher: HarperCollins Publishers
Pub. Date: February 2008
ISBN-13: 9780061353239

B&N online price: $18.16
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From the Publisher

• Why do our headaches persist after taking a one-cent aspirin but disappear when we take a 50-cent aspirin?
• Why does recalling the Ten Commandments reduce our tendency to lie, even when we couldn't possibly be caught?
• Why do we splurge on a lavish meal but cut coupons to save 25 cents on a can of soup?
• Why do we go back for second helpings at the unlimited buffet, even when our stomachs are already full?
• And how did we ever start spending $4.15 on a cup of coffee when, just a few years ago, we used to pay less than a dollar?

When it comes to making decisions in our lives, we think we're in control. We think we're making smart, rational choices. But are we?

In a series of illuminating, often surprising experiments, MIT behavioral economist Dan Ariely refutes the common assumption that we behave in fundamentally rational ways. Blending everyday experience with groundbreaking research, Ariely explains how expectations, emotions, social norms and other invisible, seemingly illogical forces skew our reasoning abilities.

Not only do we make astonishingly simple mistakes every day, but we make the same types of mistakes, Ariely discovers. We consistently overpay, underestimate, and procrastinate. We fail to understand the profound effects of our emotions on what we want, and we overvalue what we already own. Yet these misguided behaviors are neither random nor senseless. They're systematic and predictable — making us predictably irrational.

From drinking coffee to losing weight, from buying a car to choosing a romantic partner, Ariely explains how to break through these systematic patterns of thought to make better decisions. Predictably Irrational will change the way we interact with the world — one small decision at a time.

Excerpt from the Barnes & Noble Review

For many years, economics operated off the "rational actor" model, often derided as Homo economicus. He was quite a being, this Homo economicus. A perfectly rational consumer, coldly calculating in his purchases, constantly pursuing his self-interest, exquisitely sensitive to the complex information being conveyed through price tags. Think Star Trek's beloved Data, only with a credit card rather than a phaser.

Much of economics was dedicated to studying this rational actor's rational actions, and rightly so. It turned out that the pursuit of self-interest was a powerful motivator. But in recent years, much in economics has been dedicated to studying where the model breaks down. The emergent movement — which takes cues from psychology, sociology, anthropology and even neuroscience — has been termed behavioral economics, and Ariely is one of its foremost practitioners.

The nice thing about traditional economics was that you could simply assume rationality. To find out how humans behave, however, requires constructing elaborate tests that allow you to watch their actions as you tweak certain variables. And that's what Ariely excels at. His book is a compendium of these tests, both the ones he and his colleagues have designed and the ones that life has designed for them...

Experiment after experiment shows the delicate and unstable edifice on which our rationality rests...

But Ariely's point goes far beyond our irrationality — it is the predictability of our processing flaws that interests him. It isn't that we sometimes make the wrong decision, but that we make it repeatedly, and in the same way, as a response to certain conditions and mental processes. -Ezra Klein

Read the complete review.

Kirkus Reviews

Most people don't know what they want and don't know that they want it — until they see it and the reptilian brain kicks in. "Everything is relative," writes economist Ariely (Behavioral Economics/MIT), "and that's the point."

His book, a cousin to Freakonomics and The Long Tail, is a spry treatise on how the world works and how we spend our money based on other people's rules. Knowing that everything is relative, says Ariely, a merchandiser will display a 19-inch television next to 26-inch and 32-inch models, the prices progressing from $210 to $385 to $580, with the point being to sell the nicely profitable, nicely midsize model first. Of course, because we want more relative to what we have, that merchandiser will hope to see us again, now clamoring for the bigger, more expensive model. Thus the economy chugs along, and thus our credit debt deepens. When the time comes to buy that bigger goodie, then we will respond to an "anchor price" that somehow worms its way into our mind. This is the same anchor price that leads us to think that a $4 cup of coffee is acceptable, and after doing it once, we do it again, for we now "assume that this is the way you want to spend your money." Is it?

Maybe not, but people are funny creatures of habit, and it is for all of us that Ariely has a brilliant solution to a problem that is very real: "a self-control credit card that would let people restrict their own spending behavior," categorically and overall, fixing, say, grocery spending at $200 a week and coffee spending at $75 a month. Fat chance of it catching on, he allows: After all, the credit-card companies make $17 billion a year in interest charges. They know our irrational ways, too. Make a point of seeing this book. That way you'll know you want it, and you will.

About the Author

Dan Ariely is the Alfred P. Sloan Professor of Behavioral Economics at the Massachusetts Institute of Technology, where he holds a joint appointment between MIT's Media Laboratory and the Sloan School of Management. He is also a researcher at the Federal Reserve Bank of Boston and a visiting professor at Duke University. Ariely wrote this book while he was a fellow at the Institute for Advance Study at Princeton. His work has been featured in leading scholarly journals and a variety of popular media outlets, including the New York Times, the Wall Street Journal, the Washington Post, the Boston Globe, Scientific American and Science. Ariely has appeared on CNN and National Public Radio. He divides his time between Durham, North Carolina, Cambridge, Massachusetts and the rest of the world.

What People Are Saying

"Predictably Irrational is wildly original. It shows why-much more often than we usually care to admit-humans make foolish, and sometimes disastrous, mistakes. Ariely not only gives us a great read; he also makes us much wiser." -George Akerlof, 2001 Nobel Laureate in Economics, Koshland Professor of Economics, University of California at Berkeley

"Filled with clever experiments, engaging ideas, and delightful anecdotes. Dan Ariely is a wise and amusing guide to the foibles, errors and bloopers of everyday decision making." -Daniel Gilbert, Professor of Psychology, Harvard University, and bestselling author of Stumbling on Happiness

"This is going to be the most influential, talked-about book in years. It is so full of dazzling insights-and so engaging-that once I started reading, I couldn't put it down." -Daniel McFadden, 2000 Nobel Laureate in Economics, Morris Cox Professor of Economics, University of California at Berkeley

"The most difficult part of investing is managing your emotions. Dan explains why that is so challenging for all of us, and how recognizing your built-in biases can help you avoid common mistakes." -Charles Schwab, Chairman and CEO, The Charles Schwab Corporation