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Predictably Irrational: The Hidden Forces That Shape Our Decisions
HarperCollins Publishers Ltd Search HarperCollins Publishers Ltd by Dan Ariely Search Dan Ariely
Customer Reviews:
This was really an eye-opener
We like to believe that we are rational. Many investment philosophies are based on efficient market theory, which assumes that market participants are well-informed and act rationally. I always found efficient market theory to be flawed, because when I looked at individual investors, I would get surprised more and more every day by how irrational their behavior was. So how it is possible for markets to be efficient, when most investors I know are completely irrational? Well, this book has some really good explanations.
The author of this book shows us that even though we believe that we act in a rational way, in reality we act in predictably irrational way. As a result of this irrationality, we frequently make poor decisions with our money, life partners, and health. For example, we tend to overvalue things that we own. We might be made to believe that something works even when it doesn't. A placebo is perfect example.
This book was really an eye-opening experience. We all do the things the author talks about. As I read this book, I kept catching myself and saying, "Yes, I did this, too." I enjoyed reading this book, and I would recommend it.
- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market
predictably irrational
Predictably irrational is for behavioural economics, what freaconomics is for micro-econometrics; a readable, thoroughly enjoyable introduction into a scientific field and work method that is largely unknown to the general public.
Although Levitt and Ariely might not always share each others convictions regarding the differences between the two fields, they do share the believe that economics and its toolset can be used to explain even the quirkiest of human behaviour. They also share the capability to present research in a way that appeals to both the layman and the economists alike. To me this is one of the must-haves.
Generally profound
Dan Ariely helped me stating how and why the people are irrational (much more than I thought, including myself). It led me to understand some of my flaws and also ways to do better. But most of all, it helped me understand people better and how to work with them. That's the reason why it is profound.
It is also general, because it requires a minimum effort so that you apply it to your current life and get great results. I like specially the part of the decoy effect and how the starbucks used a new experience to establish new reference prices for cofee. It is certainly very valuable for anyone. I recommend it for people who are interested in becoming successful through the mandatory principle of the mastermind.
Enjoyable and worthwhile insights, but lacking in depth 
The basic premise of this book is that human beings behave in ways which are irrational, and that through experimental procedures we can begin to predict with some reliability certain facets of this irrational behaviour. So far so good - the book does demonstrate this quite conclusively and many of the experiments are interesting and thought-provoking in their potential implications.
However, there is a further, occasionally implicit and often explicit premise, which is that the insight contained within the book is (a) novel, (b) devastating to conventional economic theory and (c) useful to the reader in being able to avoid the irrationalities described.
This is where I think it over-extends itself. On (a), the field of behavioural economics is not nearly as new as he seems to imply, although it is certainly increasingly fashionable. Ariely may be doing interesting and sometimes novel experimental research, but this doesn't by any stretch mean he's a pioneer or revolutionary in behavioural economics or indeed economics in general. This connects to (b) too. Perhaps I'm naive here, but I'd be shocked if the idea that humans behave in irrational ways in economic interactions was news to anyone who'd studied economics seriously. Okay, in an introductory economics class or A-level you are likely to be fed the overly simplistic theoretical abstractions that Ariely refers to - the rational consumer and so on - but at some point you would move beyond this. At the serious end of the academic spectrum, where Ariely ought to be taking his reference points, his characterisation of conventional economic theory has a strong stench of straw man about it. More than that, although I'm no expert on economics, I got the sense on a couple of occasions that his grasp of some basic economic concepts was actually little bit wayward. It's a tough thing to argue because he has some impressive qualifications in related subjects and I don't, so I'd be interested to hear the thoughts of others on this. I could be wrong, but he wouldn't be the first to have an impressive qualification while operating on a basic conceptual misunderstanding or two. On (c), the utility of the book to the reader, his repeated argument is that by being aware of your own irrationality in certain ways you can recognise it when it happens and mitigate it. This may be true to a limited extent, but even it if is it will only help in the few specific situations Ariely describes, not more generally. It also runs somewhat contrary to his central thesis that we lack rational control over the impulses that make us act in these ways. What is more frustrating is that he falls back on this point so often. Several times he gives an insight into irrationality and then argues its import by saying that it will help the reader to avoid the same pitfall. That's really weak.
In fact that's just a symptom of the main problem with the book. Despite its bold claims it is very, very poor in making the connections between 1. the experiments and insights into irrationality that are offered and 2. practical matters of economics, politics or whatever else. The connections he offers are nearly always ill-thought-through and display a real lack of breadth and depth of world-view. He dives head first into fields he has no apparent knowledge of, making recommendations with absolute conviction. He sometimes gives off the air of an otherwise intelligent and well-meaning teenager who has just taken drugs for the first time and thinks he's solved life's deepest problems in an evening. There's a real lack of self-awareness. The book could have been half the length, twice as humble and would have lost nothing in content but gained a lot in credibility.
For these reasons I was very tempted to give it 3 stars. But in the end, if you just take the experiments at face value and ignore his bolder claims, there's enough of genuine interest in there to justify 4 stars. Forget about the implications - you'll have to think about those yourself (no bad thing of course). There's no doubt the guy has a great eye for an experiment and is genuinely fascinated by this stuff, which is refreshing and infectious. He also writes in a very easy off-the-cuff style that makes it very easy to whizz through the book in not much time at all. Overall I'd certainly recommend reading it, just don't expect your world to be turned upside down unless you're one of the few people left who truly believe that humans are perfectly rational creatures.
Indepth look into motivation
This book really shows upon what strange factors humans often make decisions. Far from being the rational actors that we are assumed to be, very irrational factors come into play.
The author does a great job in clearly describing various experiments that he has undertaken to show how people really think. These are well explained and many of them are memorable.
The book is split up into discrete and easily digestible chapter and never becomes defocused or lacking in interest.
If you would like and insight into the complexities of the mind then read this!
Listmania Lists:
Behaviour, Economics et al.
Bias for Beginners: how decisions and beliefs get skewed
Decisions, statistics and probability (in that order).
Behavioural Economics
Food for thought
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the power and value of greater human understanding
blog - http://nudges.wordpress.com/ predictably irrational - http://www.amazon.co.uk/predictably-irrational-hidden-forces-decisions/dp/0007256531/ref=sr_1_1?ie=utf8&s=books&qid=1245231575&sr=1-1 ...
http://www.mccann-erickson.co.uk/2009/07/the-power-and-value-of-greater-human-understanding.html
The true cost to the university of student tuition fees?
... of the introduction of fees is greater than we'd imagined. References. Ariel, D. (2008). Predictably Irrational: The Hidden Forces that Shape Our Decisions. London: Harper. ISBN: 0007256531. [Amazon]. Convert this article to PDF.
http://chrishutchison.org/attica/2009/04/01/the-true-cost-to-the-university-of-student-tuition-fees/
Predictably Irrational: The Hidden Forces That Shape Our Decisions
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predictably irrational: the hidden forces that shape our decisions
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