PREDICTABLY IRRATIONAL BY DAN ARIELY

Key Concepts

• Relativity: People rarely choose things in absolute terms. We make decisions based on comparisons, often manipulating our choices by the presence of a "decoy" option (e.g., choosing between an A, B, and B-minus option).
• The Power of "Free": Zero price has a disproportionate emotional pull. We often choose a "free" option over a slightly better, inexpensive option, which can lead to poor decision-making and wasted value.
• Social vs. Market Norms: We live simultaneously in two different worlds: one where market norms (money, prices, competition) apply, and one where social norms (friendship, generosity, community) apply. Mixing the two can be disastrous for relationships and motivation.
• Procrastination and Self-Control: Humans struggle with immediate gratification over long-term goals. Ariely explores ways to use commitment mechanisms to bind ourselves to better behaviors, like setting deadlines or automatic savings plans.
• The Endowment Effect: We tend to overvalue things we own simply because we own them. This bias makes it difficult to sell items or make rational investment decisions.
• The Placebo Effect: Our expectations can change our reality. The price of a medication, or the perceived brand of an energy drink, can physically change how effective we feel it is, demonstrating the powerful link between mind and body.
• Honesty and Dishonesty: Ariely investigates why people cheat and steal, often finding that most people cheat just a little bit, balancing the desire for gain with the need to view themselves as honest individuals.