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Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions |  | Author: Dan Ariely
Publisher: Harper
List Price: $27.99
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Rating:  35 reviews
Sales Rank: 580
Media: Roughcut
Edition: Rev Exp
Pages: 400
Number Of Items: 1
Shipping Weight (lbs): 1.5
Dimensions (in): 9.1 x 6.4 x 1.2
ISBN: 0061854549
Dewey Decimal Number: 153.83
EAN: 9780061854545
ASIN: 0061854549
Publication Date: June 1, 2009
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Product Description
How do we think about money?
What caused bankers to lose sight of the economy?
What caused individuals to take on mortgages that were not within their means?
What irrational forces guided our decisions?
And how can we recover from an economic crisis? In this revised and expanded edition of the New York Times and Wall Street Journal bestseller Predictably Irrational, Duke University's behavioral economist Dan Ariely explores the hidden forces that shape our decisions, including some of the causes responsible for the current economic crisis. Bringing a much-needed dose of sophisticated psychological study to the realm of public policy, Ariely offers his own insights into the irrationalities of everyday life, the decisions that led us to the financial meltdown of 2008, and the general ways we get ourselves into trouble. Blending common experiences and clever experiments with groundbreaking analysis, Ariely demonstrates how expectations, emotions, social norms, and other invisible, seemingly illogical forces skew our reasoning abilities. As he explains, our reliance on standard economic theory to design personal, national, and global policies may, in fact, be dangerous. The mistakes that we make as individuals and institutions are not random, and they can aggregate in the market—with devastating results. In light of our current economic crisis, the consequences of these systematic and predictable mistakes have never been clearer. Packed with new studies and thought-provoking responses to readers' questions and comments, this revised and expanded edition of Predictably Irrational will change the way we interact with the world—from the small decisions we make in our own lives to the individual and collective choices that shape our economy.
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Showing reviews 1-5 of 35
 Predictable Indeed November 3, 2009
Asher Gabbay (Israel)
In the past decade or so Behavioural Economics has become all the rage in both academic circles and among the general public. The financial crisis that started with the bursting of the sub-prime mortgage bubble in the US a couple of years ago has given behavioural economists a major boost.
The basic premise of behavioural economists is that humans are not necessarily rational when they make economic or financial decisions. One of the cornerstone assumptions of "traditional" economics is that we decide based on rational analysis of costs and benefits and seek to maximise our financial gains. It turns out this is not the case and many of our decisions are driven by "irrational" factors that defy the premises of traditional economics.
Professor Dan Ariely is another ex-Israeli scientist that has popularised Behavioral Economics with his book Predictably Irrational. Using relatively simple experiments he shows that many of our decisions are influenced by irrational factors, but more importantly, that this irrational behaviour is, in many cases, predictable. In other words, contrary to popular belief (at least in the last 300 or so years of the "scientific era"), humans are inherently irrational.
Here are a few examples:
- People will feel better taking a medicine that costs 10 times as much as another, identical, medicine.
- When faced with a free product, we will likely "buy" it even if they don't need it.
- Sexual arousal will lead people to change their behaviour and perform deeds they deem immoral.
- We will think food or drink are better if they are presented in a more glamorous setting.
Ariely's book is highly entertaining and provides some delightful nuggets of truth about ourselves. But I didn't find many of his "discoveries" surprising. It is true that we like to see ourselves as rational machines, but most of our life experiences clearly demonstrate this is not the case. Blind belief in a purely rational brain is, well, irrational. The work of Nobel prize winner Daniel Kahenman (with his partner Amos Tversky), around how people decide between alternatives involving risk, has been known for many years. Ariely's achievement is mainly in popularising the subject and presenting it in a way that most people can understand.
A fun introduction to behavioral economics October 29, 2009
Bojan Tunguz (Greencastle, IN USA)
Many decisions that we make in our daily lives seem quite irrational when analyzed dispassionately and coolly in terms of whether those decisions make any economic sense or are they beneficial to us in some other way. And yet, those irrational decisions are not completely random, but there is some reason to their madness. The part of psychology that deals with this "irrationality" in marketplace is referred to as behavioral economics, and this research field has had a great impact on our understanding of how markets work and has been the major intellectual and empirical driving force away from the idealized rational agents of classical economic theory.
Behavioral economics is also the main subject of this eminently readable and entertaining book. In it the author, Dan Ariely, takes the reader on a tour of various ingenious and insightful psychological experiments that shed some light on the way we make economic decisions. The sorts of experiments described - from drinking various beers at restaurant, selling and buying tickets for a favorite sports team, to cheating in various situations when money or products are at stake - are all very relevant to everyday life. Ariely is also a very engaging writer and the book has a very strong personal feel. However, this overly personal approach can get to be a bit distracting at times. It would have been helpful if the author used examples from other researchers in the field or at least tried to show how his own research fits within some larger picture or framework. As it is, the reader almost gets the impression that Ariely has single-handedly come up with the ideas and concepts that are presented in this book.
Another problem that I have with this book is that it doesn't seem to have a well defined focus, other than the "irrationality" itself. Too many concepts from psychology (priming, placebo, peer pressure, etc.) are conflated and made to seem to be just manifestations of single overarching "irrational" behavior. I would have also liked if the author tried to provide more explanation for why we do act in this seemingly irrational way. A brief description of evolutionary forces that shaped our thinking would have been useful. Many of these "irrational" behaviors certainly must have had some purpose; otherwise we would have become extinct long time ago.
Overall, this is a very well written and entertaining introduction to behavioral economics. It will make you look at your everyday microeconomic decisions in a whole new light.
 Building the world's first rational mind October 2, 2009
Robert Jones (Emporia, Kansas USA)
0 out of 5 found this review helpful
It has been known for some time that people are not fully rational. The real question isn't can we fix people. I think that we can not. Rather, the question is can we make machines which ARE rational. My Asa H is such an attempt (R. Jones, Trans. Kansas Acad. of Sci. vol. 109, pg 159, 2006). Artificial intelligence can be thought of as the attempt to build the world's first rational mind.
 Phenomenal Book September 29, 2009
O. Eshel
1 out of 1 found this review helpful
Probably the best book I've read yet on behavioral economics. Each chapter is well organized around a specific topic and incredibly thought provoking. I highly recommend it.
Interesting book for the lay audience, less so for the scientist September 21, 2009
moose_of_many_waters (Palo Alto, CA United States)
8 out of 10 found this review helpful
A broad survey of how we often make decisions and judgments that ultimately are wrong or not in our best interest, this book is best when it talks about specific issues of economics and rather mundane when it examines general psychological behavior. Mr. Ariely is not a gifted writer, but he is a serviceable one. He also is not shy about citing other people involved in this work. Culturally, he is definitely an Israeli, which means American readers, especially women, may groan when he writes about male/female relationships. The book is front loaded with the interesting material, which focuses on such topics as pricing. Toward the end, the author seems to be out of his depth in his cursory looks at broad topics like dishonesty.
From the standpoint of a scientist, his descriptions of his experiments seem a bit alarming. They seem overly simplistic and more importantly have far too few people surveyed to fully back the conclusions of the work. I can only hope that the author, in trying to make the book more accessible to the lay audience, has left out important information on how his work is done.
Overall, I'd say that there is about 1/2 a book worth of interesting material here. That's probably better than most books today. It tends to have a fairly engaging and humorous style. It's very accessible (although my mother-in-law, a very bright woman, said to me that a couple of the chapters were tough going). I'd recommend reading the first four chapters and skipping the rest.
Showing reviews 1-5 of 35
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