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Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions

Dr. Dan Ariely · 17 HN comments
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Amazon Summary
Why do our headaches persist after we take a one-cent aspirin but disappear when we take a fifty-cent aspirin? Why do we splurge on a lavish meal but cut coupons to save twenty-five cents on a can of soup?When it comes to making decisions in our lives, we think we're making smart, rational choices. But are we?In this newly revised and expanded edition of the groundbreaking New York Times bestseller, Dan Ariely refutes the common assumption that we behave in fundamentally rational ways. From drinking coffee to losing weight, from buying a car to choosing a romantic partner, we consistently overpay, underestimate, and procrastinate. Yet these misguided behaviors are neither random nor senseless. They're systematic and predictable—making us predictably irrational.
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I read many books in field of psychology focusing on rationality / irrationality. I think some of the best are:

Mindware by Richard Nisbett - a researcher focusing on this for decades distills his best insight in a recent book.

https://www.amazon.com/Mindware-Tools-Thinking-Richard-Nisbe...

Predictably Irrational by Dan Ariely - a classic book in the field.

https://www.amazon.com/Predictably-Irrational-Revised-Expand...

I have found (academic) analytic philosophy to be a great way to slow down and think clearly. So I propose exposing yourself to well-thought-out arguments to see the kinds of "moves" people make.

A good place to start may be with the book by Daniel Dennett: Intuition Pumps And Other Tools for Thinking https://www.amazon.com/Intuition-Pumps-Other-Tools-Thinking-...

Similarly, it's great to read good science books with careful arguments. One of the best I think is Culture of Honor: The Psychology of Violence in the South https://www.amazon.com/Culture-Honor-Psychology-Violence-Dir... -- the authors use a variety of independent experiments to make their conclusions.

In general, it's probably worth learning a bunch of psychology too - to understand others better (along with the variety of cognitive biases people have). A classic book in this direction is Dan Ariely's Predictably Irrational https://www.amazon.com/Predictably-Irrational-Revised-Expand...

indeed; for those who may not be familiar, see 'behavioral economics' [0] for the ways that known quirks in human reasoning can be used to game consumers. don't buy a house without learning about it.

there are two great books I recommend for those interested: predictably irrational [1] and the upside of irrationality [2]. personally, I think the first is better than the second as a layman's introduction to it.

[0] https://en.wikipedia.org/wiki/Behavioral_economics

[1] https://www.amazon.com/Predictably-Irrational-Revised-Expand...

[2] https://www.amazon.com/Upside-Irrationality-Unexpected-Benef...

chaseha
you mentioned real estate - do you know of any books/articles that delve into behavioral economics from a homebuyer's perspective?
It's not a lie, though.

It just means they saw some value in the product but didn't feel enough motivation to actually follow through and signup/use the product.

This is similar in many ways to someone answering "it's too expensive". The value prop is either not strong enough, not being marketed well enough, too complicated to start using... or the product is solving a pain point that people don't care enough about to build a business around it. Which is a serious question the OP needs to ask themselves. Unless their traffic<costs>conversion rate ratio is sufficient.

You can't expect customers to articulate that everytime (10-20% seems about right to me) because most people aren't actually thinking their actions through when visiting a landing page. Especially when it's via an ad... not something they searched out on Google or via referral.

Even if they did tell you they wouldn't necessarily know why... because you're assuming it was a rational thought process, or something they spent time thinking through, which is rarely the case. Books about how customers acting 'irrational' [1] are very useful at explaining this and are important to always be considering when doing marketing/UX design.

[1] https://www.amazon.com/Predictably-Irrational-Revised-Expand...

Apr 26, 2016 · boulos on Do not talk about pricing
Predictably irrational by Dan Ariely has a good number of case studies that I think illuminate the topic particularly well:

  http://www.amazon.com/Predictably-Irrational-Revised-Expanded-Decisions/dp/0061353248
Unsurprisingly there's some sort of combo deal to get Thinking Fast and Slow with it.
clarkmoody
My link [2] actually has a video of Ariely talking about this stuff.
pc86
If you remove the spaces before that link it will be clickable.
None
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boulos
Ugh, I always forget that I shouldn't do that here (I move URLs out of the way like this for email) and its been too long to edit. http://www.amazon.com/Predictably-Irrational-Revised-Expande...
The book Predictably Irrational[0] has a good section on how making the salaries of CEO's of publicly traded companies public information is one of the things that has helped lead to their salaries spiking so incredibly in recent years. It's been some time since I read the book but if I remember correctly the argument is that making them public basically removes any social embarrassment or taboo around having extravagant salaries. If sharing salary info becomes more commonplace in other areas I wonder if you'd see the same thing or the exact opposite.

[0] https://www.amazon.com/dp/0061353248

skolor
I haven't read that book, but isn't increased negotiating power for CEOs a more likely explanation than social embarrassment? If I've been chosen as the lead candidate for a CEO, it's a lot easier to justify a large salary if I can point at our competitors and say that I should be paid competitively to their CEOs.
danieltillett
It is more of a creeping process. Since no boards think their CEO is below average (if they did they would fire him/her). If their CEO is above average then the compensation they feel their CEO is due should also be above average. If everyone starts doing this then the average CEO salary will keep rising and rising. We end up in a world where all the CEO’s are above average and their salaries are in the stratosphere.
dragonwriter
The fact that board members are also themselves either executives in the same or other firms, or likely to be employed as such in the future, means that board members also have a self-interest in the trend of rising executive salaries.
danieltillett
Well there is this effect as well, but the "above average CEO, above average pay” is much easier to defend at the annual stockholders meeting.
ams6110
Governmental or state university-employed developers (as well as all other employees) have long had their salaries a matter of public record. Their salaries generally are lower than private sector though total compensation including paid time off (often 6-8 weeks/yr) must be considered.
jasonwocky
Yeah, when I worked for 5 years as a developer in municipal government, I may have had less total take home pay than some of my peers, but my "hourly rate" was easily comparable. I had 5 weeks of vacation a year to start, and worked 35 hours a week, every week.

When I left, it wasn't because of the money.

ForHackernews
Engineering salaries spiking wildly sounds like a net positive for engineers.
snowmaker
You're right that making the CEOs of publicly traded companies helped cause them to increase (among other reasons), but wrong about the mechanism.

What actually happened was the following. Suppose you're on the Compensation Committee of a board of a publicly traded company. You're deciding the CEOs salary. How do you do this? Simple, you take a look at the other public companies that are comparable (revenue, market cap, sector, etc). You get an average.

Now you don't want pay your CEO the average rate, do you? After all, he's clearly above average. So you choose a rate that's say, 75% percentile.

But this algorithm plays out iteratively. Each iteration, compensation for CEOs go up as every company tries to pay above average.

>People are rational, and want to understand, but unless you make the information properly accessible in the UX sense, your exasperation is due to your own fault.

No. They really aren't[1], and they really don't[2].

Changing your mind is very hard, and most people don't do it. Even if you have been trained to change your mind, the longer that you hold onto an idea, the harder it is to believe the idea to be false. There is a reason Neils Bohr stated "science progresses one death at a time."

You are likely reading this and coming up with a bunch of reasons that you are right, and I'm wrong. Likely: "You missed the point, You didn't talk about UX", or "The doctor was still condescending," or more likely there is some flaw in my argument that you immediately see[3]. These thoughts alone should give you a good idea that it is difficult to change your mind.

[1] http://www.amazon.com/Predictably-Irrational-Revised-Expande... [2] http://www.newyorker.com/science/maria-konnikova/i-dont-want... [3] It is also entirely possible that you don't think any of these things. It depends on how strongly you hold to the belief that you shared.

If you want to go more of the Psychology route:

Predictably Irrational (Dan Ariely, he has some TED talks as well) http://www.amazon.com/Predictably-Irrational-Revised-Expande...

Influence, the Science of Persuasion (Robert Cialdini) http://www.amazon.com/Influence-ebook/dp/B002BD2UUC

On a related note, for anyone interested in this, I recommend reading "Predictably Irrational" by Dan Ariely[1]. He does actual studies and discusses a lot of these things (bias to loss aversion, change in behaviour when 1-layer detached from cash) and more.

[1] http://www.amazon.com/Predictably-Irrational-Revised-Expande...

I really enjoyed Dan's book Predictably Irrational. If you have any interest in human motivation and rationality, I'd recommend you pick up a copy: http://www.amazon.com/Predictably-Irrational-Revised-Expande...
alex_c
He also has an excellent course on Coursera on this subject:

https://www.coursera.org/course/behavioralecon

Dan Arielly's "Predictably Irrational" (http://www.amazon.com/Predictably-Irrational-Revised-Expande...) is a great book that covers such phenomenon.
You seem to be talking about the replacement of intrinsic with extrinsic rewards

I first read about that in the book predictably irrational. here is a link

http://www.amazon.com/gp/product/0061353248/ref=as_li_qf_sp_...

(Nb: I stole this affiliate link from Startup Slingshot. Their affiliate link merely appears high in the google for this title. I have no association with Startup Slingshot)

To your question, I think there is a big difference between talking to dinner guests and talking to your audience, especially if your audience is already buying something from you. It's not like you insert contextual ads either into the stream of cocktail hour.

I highly recommend reading "Predictably Irrational" by Dan Ariely if you thought this article was interesting. It covers exactly this subject and makes for fascinating reading. I picked up the book about a week ago via some other post linked here on HN and I'm loving it.

http://www.amazon.com/Predictably-Irrational-Revised-Expande...

"The probability that a certain person be stupid is independent of any other characteristic of that person."

This is assuredly true, on the basis of replicated research, with regard to IQ. There is essentially no correlation between IQ and rationality.

http://www.project-syndicate.org/commentary/stanovich1/Engli...

High-IQ people can be every bit as irrational ("stupid" in the language of the submitted article) as low-IQ people, and worse still, not notice that they are being stupid. There are whole books on the subject.

http://www.amazon.com/Why-Smart-People-Can-Stupid/dp/0300101...

http://www.amazon.com/Blunder-Smart-People-Make-Decisions/dp...

http://www.amazon.com/Why-We-Make-Mistakes-Without/dp/076792...

http://www.amazon.com/Sway-Irresistible-Pull-Irrational-Beha...

http://www.amazon.com/Predictably-Irrational-Revised-Expande...

All we can do about that here on HN is take other people's comments seriously and try to see ourselves as others see us as we ponder our decisions.

I also liked his book, also called "Predictably Irrational": http://www.amazon.com/Predictably-Irrational-Revised-Expande...
Dec 29, 2010 · ccollins on Restaurant Menu Pricing
Looking through Amazon comments [1], there seems to be some agreement that Ariely's studies lack any statistical significance.

Are there any solid statistics-backed intro books to Behavioral Economics?

[1] http://www.amazon.com/Predictably-Irrational-Revised-Expande...

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