Predictably Irrational Book Summary

Book Summary

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Brief Summary

Next time you are choosing your breakfast cereal, take a moment, and pause before you pull it off the shelf. Consider the following: Are you making this selection because you like the color of the box? It is because it is cheaper than the other cereals in the aisle? Is it because there is an incentive on the back for something free? Is it because it is the first cereal you saw when you walked into the grocery store? Or is it because you grew up in a household full of Fruit Loops and would love to mentally return to that spot?

Regardless of your answer, the point remains the same. If we are willing to take the time to break down our decisions--even small ones--into their base components, we start to develop a sense of what motivates us to make the choices that we do. We can use this awareness to better our lives, better ourselves, and to avoid falling victim to the same psychological traps that worm their way into our decision-making processes time and time again.

About the Author

Daniel Ariely is an Israel-American author and professor. He was born in 1967 in New York City, New York. Ariely holds two Ph.Ds--one in cognitive psychology from the University of North Carolina at Chapel Hill (1996) and another in marketing from Duke University (1998).

Throughout his career, Ariely founded several companies, most of which focused on applying behavioral science and economics to marketing and strategy problems.

In addition to his extensive entrepreneurial experience, Ariely has taught behavioral economics at both the Massachusetts Institute of Technology and his alma mater, Duke University.

Predictably Irrational: The Hidden Decisions That Shape Our Decisions was Ariely’s first book.

Topics

Self Development Psychology

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Key Insights

While we all like to think of ourselves as wholly pragmatic and objective in our decision-making capabilities, the processes we follow when choosing a product or service are heavily influenced by outside factors, many of which are unconscious. Our memories, our personal biases, our experiences, and our present circumstances all play a key role in every choice we make. By becoming even slightly more aware of our subconscious inclinations, we can start to recognize maladaptive patterns and teach ourselves to become savvier consumers and humans.

On Comparison

You may have heard the expression, “Comparison is the thief of joy.” This phrase, originally coined by former President Theodore Roosevelt, expresses that when we compare our accomplishments to those of others who are presumably more successful than us, we diminish our ability to find happiness in our own lives.

A modern-day example of this effect?

Instagram.

We might be feeling good about our recent trip to the Adirondacks until we see someone else’s picture of a week spent in Paris. Suddenly, our adventure in the mountains feels less significant than it did five minutes ago.

Rationally, we know that comparison leads to negative feelings of self-worth. And yet, we are still hard-wired to compare, over and over again.

Nowhere is the role of comparison more prevalent than in the retail and foodservice industries. In designing products, many companies capitalize on the consumer’s tendency to compare by purposefully manipulating prices. Take restaurants, for example. Some restaurants intentionally put expensive items on their menus so that people view the alternate options as cheaper by comparison.

You see that the $50 steak is expensive, so you justify your decision to order the $35 hamburger because at least you are not spending as much money as you would have on the steak! In your mind, you have made a smart decision...when, in reality, $35 is still a lot of money for a hamburger!

In social science, this phenomenon is referred to as the anchoring bias. You are basing your order on the menu items you see in front of you rather than considering what a particular dish would typically cost at other, similar restaurants nearby.

The Power of Free

To humans, the word free is more than just a string of letters put together--it is also an incredibly powerful emotional trigger. When a no-cost item is made available to us, we almost always go after it, even if it is an item that we absolutely do not need. In an attempt to rationalize our choice, we are quick to invent a reason as to why our acquisition could be useful in the future.

Oh? You are giving away those key chains? It will take twelve! When my toddler grows up and turns sixteen, she will use them for her car keys and so will all of her friends!

Our minds respond to the promise of freedom in a very specific way.

Consider chocolate, one of America’s favorite drugs.

In a study, a group of people was offered a choice between $.15 Lindt truffle (tasty) or $.01 Hershey’s Kisses (less tasty)....