Predictably Irrational

By Dan Ariely

We are all far less rational in our decision-making than standard economic theory assumes. 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.

If we do nothing while we are feeling an emotion, there is no short- or long-term harm that can come to us. However, if we react to the emotion by making a decision, we may not only regret the immediate outcome, but we may also create a long-lasting pattern of decisions that will continue to misguide us for a long time.

The hidden forces that shape our decisions

1. The truth about relativity

   Why everything is relative - even when it shouldn't be

   Anchoring

2. The fallacy of supply and demand

   Why the price of pearls - and everything else - is up in the air

3. The cost of zero cost

   Why we often pay too much when we pay nothing

4. The cost of social norms

   Why we are happy to do things, but not when we are paid to do them

5. The influence of arousal

   Why hot is much hotter than we realize

6. The problem of procrastination and self-control

   Why we can't make ourselves do what we want to do

7. The high price of ownership

   Why we overvalue what we have

8. Keeping doors open

   Why options distract us from our main objective

9. The effect of expectations

   Why the mind gets what it expects

10. The power of price

    Why a 50-cent aspirin can do what a penny aspirin can't

11. The context of our character

    • Why we are dishonest, and what we can do about it
    • Why dealing with cash makes up more honest

12. Beer and free lunches

    What is behavioral economics, and where are the free lunches?