Summary Of Predictably Irrational By Dan Ariely

Going through severe pain changes a person, it changes the way one thinks, it changes how one sees the world. For Dan Ariely, an unforeseen explosion at the age of eighteen turned his life around and left him in critical condition. Third degree burns covering almost a third of his body kept him covered in bandages for three years and had him analyzing the nurses’ decisions. The exploration of why and how the caretakers chose to treat the patients led Ariely, a behavioral economist, to write Predictably Irrational: The Hidden Forces That Shape Our Decisions. The author performs a series of social experiments and discusses how little control we have over the choices we make on a daily basis. Human beings make decisions based on many factors,
some justified and others emotionally persuaded, but nonetheless all predictable.
“Standard economics assumes that we are rational...
But, as the results presented in this book (and others) show, we are far less rational in our decision making...Our irrational behaviors are neither random nor senseless - they are systematic and predictable. We all make the same types of mistakes over and over, because of the basic wiring of our brains” (Ariely). Ariely’s novel dives into the depths of ones subconscious when making a decision. Whether it is what house to buy, where to go on vacation or who is better looking one’s decision although not always rational can often be predicted based on what other options are given. It all leads to the fact that decisions are often based on relativity, the first chapter of the novel testifying “Why everything is relative-Even when it shouldn’t be”(Ariely). After reading this statement many might wonder if they are really making the best choice and if not can a person prevent himself or herself from being
predictable.
Before someone can change there life for the better they must fully understand the problem and where it is coming from and Predictably Irrational helps do just that.
Ariely introduces what he calls, a decoy, used by marketing professionals and many global companies in order to get the consumer to spend more money. The job of the decoy is to allow the buyer to compare two options, with a clear superior, encouraging the purchase of a certain product. “humans rarely choose things in absolute terms. We don’t have an internal value meter that tells us how much things are worth. Rather, we focus on the relative advantage of one thing over another, and estimate value accordingly”(Ariely). For example, if a man is looking to buy a car the salesperson, who wants to sell a Ford, will often show three option; a Ford SUV with premium features, a Chevy SUV with the same premium features and for the same price, and a basic Ford SUV model for a cheaper price. Ariely explains that although the Ford and Chevy model are arguably equal in value majority of people tend to believe that the Ford is more valuable because they can easily compare it to the basic model Ford. Ultimately this points the buyer in the direction of purchasing the car the salesperson desired to sell.
Ariely uses many examples similar to this in the novel to show how a decoy can alter ones perception of value. It also arises to the fact that “we not only tend to compare things with one another but also tend to focus on comparing
things that are easily comparable and avoid comparing things that cannot be compared easily”(Ariely). One can learn from this to establish the decoy and then remove it as an option before making your decision. This will prevent you from creating false opinions based off of the comparison to a decoy and allow you to weigh the products evenly.
In an article reviewing Dan Ariely’s novel Iva Kostadinova gives her opinion by stating “Ariely shines light on our irrationality by providing empirical data from diverse sets of social experiments that reveal unambiguously and directly the emotional and social forces which influence our irrational decisions. The beauty and attractiveness in these experiments comes from the fact that they are drawn from our common experience and we have often, unknowingly, been participants in many of them” (Kostadinova). Kostadinova’s outlook sheds light on the fact that most people can relate to one of the experiments explained by Ariely, this makes it much easier to comprehend the idea he is trying to get across. Bottom line the choices one make are not always rational but are often manipulated, without the person even knowing. Grasping this idea can ultimately change the lives of many because with this comes the ability to seek out unwanted influences.
Consistently throughout the book Ariely explains that as humans, “the more we see the more we want” (Ariely) and the only way to break this sequence is to demolish relativity, which for most is not possible. Everyday there are millions of images around us; in magazines, on website and even on the next-door neighbor. It is natural for one to desire the possessions of those that they see around them, those that are in the limelight and even simply people that are happy. An example the author uses in the book explains how a medical researcher had always wanted to win a Nobel prize, that was his goal, that’s what he wanted to make him happy, but years into researching he started to see all of his friends, who were also researchers, buying nice cars and nice boats and he wanted that. So he changed his idea of happiness and abandoned his quest for a Nobel prize and instead settled for the happiness he believed he would receive form a large paycheck.
This idea leads itself into the notion that “most people don’t know what they want unless they see it in context”(Ariely). A person’s idea of happiness or an emotion for that matter can change in an instant; witnessing other people experience feelings can in return manipulate how one perceives said feeling. However the irrationality goes much past feelings, one article about rationality presented the notion that “Irrational thinking has a big impact on our lives. Because of irrational thinking ‘physicians choose less effective medical treatments; people fail to accurately assess risks in their environment; information is misused in legal proceedings;’ (Stanovich, 2009), millions of dollars are spent on useless programs, services and products in government and private industry; millions and millions of dollars are spent on dietary supplements; and the list goes on”(Hale).
The excerpt above taken from an article written by Jamie Hale puts into perspective how much these decisions, even small, can affect a person’s life when the process behind the judgment is not rational. Hale also expands on Ariely’s claim “why a 50-cent aspirin can do what a penny aspirin can’t” and how a person believes that a medical aid will work better if it is more expensive. Relativity is shown in another form here, how the population perceives money to correlate with success; if something is more expensive it will work better.
In addition an article in the Physiological Bulletin presents the indication that a person will spend more money in order to finish a project rather than quit while they are ahead which would in turn save them money. “A number of experiments have supported the notion that the avoidance of waste is a motivating factor in people's decision to honor sunk costs by not abandoning a failing course of action. … One should base one's decisions on the incremental costs and benefits of undertaking any action. The resources already spent should not be a consideration” (Arkes). This idea plays off of many formed by Ariely funneling to the main concept that although one may believe, in this case, that they are making the most cost efficient decision to finish the project, fueled by the idea of not wanting to ‘waste’ time, materials and money, they are in fact not considering the big picture. Arkes states that the assets already expended should not play a part in a decision. This novel teaches the average person about economics by applying it to real life situations and giving examples that are easily relatable. By examining the phycology behind a persons decision and picking apart the tactics a sales company uses an individual is able to create a more beneficial scenario for them. Understanding relativity and how it effects everyday is a moral carried from start to end. When making choices it is important to remember, “We usually think of ourselves as sitting in the driver's seat, with ultimate control over the decisions we made and the direction our life takes; but, alas, this perception has more to do with our desires-with how we want to view ourselves-than with reality” (Ariely).