DAN ARIELY TALKS WITH KATE FILLION ABOUT WHY SO MANY ECONOMISTS UNDERSTAND SO LITTLE, AND HOW A BURN UNIT CHANGED HIS LIFEQ: What exactly is a behavioural economist?
A: Much of standard economic analysisassumes rationality. If you ask a standard economist why people don’t saveenough money, they’d say it’s a meaningless statement; people are reasonable,they know what they’re doing–they might not be saving a lot because maybe theydon’t have enough resources right now, maybe they want to check out how itwould feel to live with their kids at retirement, maybe they really want totest out the bounds of social security. Behavioural economists, though, believethat people make all kinds of irrational mistakes, and we try to analyze themin order to create opportunities to help people out. For instance, have youever gone to a restaurant wanting to watch your diet, but when the waiter camewith a tray of desserts, you succumbed to temptation?
The next time you’re juggling options — which friend to see, whichhouse to buy, which career to pursue — try asking yourself thisquestion: What would Xiang Yu do?
Xiang Yu was a Chinese general in the third century B.C. who tookhis troops across the Yangtze River into enemy territory and performedan experiment in decision making. He crushed his troops’ cooking potsand burned their ships.
He explained this was to focus them onmoving forward – a motivational speech that was not appreciated by manyof the soldiers watching their retreat option go up in flames. But General Xiang Yu would be vindicated, both on the battlefield and inthe annals of social science research.
WHAT WAS I THINKING?The latest reasoning about our irrational ways.
by Elizabeth Kolbert; FEBRUARY 25, 2008
People make bad decisions, but they make them in systematic ways.
Acouple of months ago, I went on-line to order a book. The book had a list price of twenty-four dollars; Amazon was offering it for eighteen. I clicked to add it to my “shopping cart” and a message popped up on the screen. “Wait!” it admonished me. “Add $7.00 to your order to qualify for FREE Super Saver Shipping!” I was ordering the book for work; still, I hesitated. I thought about whether there were other books that I might need, or want. I couldn’t think of any, so I got up from my desk, went into the living room, and asked my nine-year-old twins. They wanted a Tintin book. Since they already own a large stack of Tintins, it was hard to find one that they didn’t have. They scrolled through the possibilities. After much discussion, they picked a three-in-one volume containing two adventures they had previously read. I clicked it into the shopping cart and checked out. By the time I was done, I had saved The New Yorker $3.99 in shipping charges. Meanwhile, I had cost myself $12.91.
I missed the deadline with this book review. Although I had plenty of time to work on it (having pitched it in December), I procrastinated and ultimately pulled an all-nighter to get it in. This sacrificed my personal utility–that is, the amount of satisfaction I have derived from this assignment. Clearly, this was not a very rational thing to do.
Why on earth did I do it? According to Predictably Irrational, a fascinating new book of behavioral economics by Dan Ariely, to dither is human. “We have problems with self-control, related to immediate and delayed gratification,” he writes. We’re inclined to put off work, even if this makes little sense in light of our long-term goals.
Radio In Vivo Jan 30th 2008 Radio Show
|KUOW Speakers Forum (3/6/2008)||Listen Here|
|NPR: Dissecting People’s ‘Predictably Irrational’ Behavior
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|Dan Ariely: Our Irrational Economic Mind||Listen Here|
|The Early Show (CBS 02/19/2008)
Dan Ariely discusses his new book,
Predictably Irrational,with CBS’s Harry Smith.
|Watch Video Here|
|The Big Think (02/19?2008)||Watch Video Here|
|BloggingHeads.Tv (02/25/2008)||Watch Video Here|
|Book reading at Cody’s in Berkeley CA (03/04/2008)||Watch Video Here|
|(March 18, 2008)||Watch Video Here|
|Decisions and illusionsWe’re so smart, right?
Yet ‘Predictably Irrational’ in making our choices
|Read Interview Here|
|The Wrong Stuff – New York Post (03/10/2008) By Brian Moore||Read Interview Here|
|“Predictably Irrational is wildly original. It shows why–much more often than we usually care to admit–humans make foolish, and sometimes disastrous, mistakes. Ariely not only gives us a great read; he also makes us much wiser.”
George Akerlof, Nobel Laureate in Economics, 2001 Koshland Professor of Economics, University of California at Berkeley
| “A marvelous book that is both thought provoking and highly entertaining, ranging from the power of placebos to the pleasures of Pepsi. Ariely unmasks the subtle but powerful tricks that our minds play on us, and shows us how we can prevent being fooled.”
Jerome Groopman, Recanati Professor, Harvard Medical School and author of “How Doctors Think”
|“Predictably Irrational is a charmer — filled with clever experiments, engaging ideas, and delightful anecdotes. Dan Ariely is a wise and amusing guide to the foibles, errors, and bloopers of everyday decision-making.”
Daniel Gilbert, Professor of Psychology, Harvard University and author of “Stumbling on Happiness”
|“Predictably Irrational is going to be the most influential, talked-about book in years. It is so full of dazzling insights — and so engaging — that once I started reading I couldn’t put it down.”
Daniel McFadden, Nobel Laureate in Economics, 2000 Morris Cox Professor of Economics, University of California at Berkeley
|Dan Ariely’s ingenious experiments explore deeply how our economic behavior is influenced by irrational forces and social norms. In a charmingly informal style that makes it accessible to a wide audience, Predictably Irrational provides a standing criticism to the explanatory power of rational egotistic choice.
Kenneth Arrow, Nobel Laureate in Economics 1972, Professor of Economics Stanford University.
|A delightfully brilliant guide to our irrationality – and how to overcome it – in the marketplace and everyplace
Geoffrey Moore, author of “Crossing the Chasm” and “Dealing with Darwin”
|After reading this book, you will understand the decisions you make in an entirely new way.
Nicholas Negroponte, founder of MIT’s Media Lab and founder and chairman of the One Laptop per Child non-profit association.
|This entertaining yet brilliant book helps us recognize the foibles that underlie the decisions we make in our life — large and small, profound and banal. More than just pointing our mistakes, Ariely helps us understand and appreciate the complex beauty of human nature. It’s nothing less than a witty survival manual for the early 21st century.
David A. Ross Director emeritus, San Francisco Museum of Modern Art and Director emeritus, Whitney Museum of American Art
|A fascinating book, original in style and perspective. Every chapter presents different counter intuitive findings, and important insights that will leave you questioning a wide spectrum of beliefs about the decisions we all make. A fascinating and charming read, much like the author himself.
Dafna Ariely, Dan’s mother
|Dan Ariely is a genius at understanding human behavior: no economist does a better job of uncovering and explaining the hidden reasons for the weird ways we act, in the marketplace and out. Predictably Irrational will reshape the way you see the world, and yourself, for good.
James Surowiecki, author of “The Wisdom of Crowds”
|Dan brilliantly shatters common misperceptions in highly unusual ways that become permanently etched in your memory. Predictably Irrational will forever change how you think about such diverse subjects as product pricing, packaging, and online sex. It is a must read for anyone who wants to make better decisions in either their personal or professional life. We plan to buy copies for all of our clients. Of course, we expect to receive a family discount….
Yoram Ariely, Dan’s father
|Predictably Irrational is a an engaging, insightful and funny book, with important lessons for the decisions we make every day. But, imagine how it feels to live with the author ….
Sumi Ariely, Dan’s wife
|Predictably Irrational is a solidly scientific, eminently readable, and remarkably insightful look into why we do what we do every day … and why it’s so hard to change, even when we “know better.”
Wenda Harris Millard, President, Media, Martha Stewart Living Omnimedia
|One of the best books this year, or any year. A towering contribution that helps us better understand how much un-thinking we do most of the time, and how to counteract it. Everyone who has to make decisions (and has to deal with decisions of others) must read this book.
Alan Kay, President of Viewpoints Research, winner of the Turing, Draper, and Kyoto Prizes
|If you are interested in finding out why looking at things with a traditional mindset does not always provide meaningful or relevant insights…read this book.
Vince Barabba, Chairman, Kings County Ventures and Market Insight Corporation
|Predictably Irrational will amuse you as it makes you wiser, and what you will learn about how you make choices will surprise you and may even change you. As a bonus, you will learn how much fun the scientific study of decision making can be.
Daniel Kahneman, Nobel Laureate in Economics, 2002 ugene Higgins Professor of Psychology and Public Affairs, Princeton University.
|Predictably Irrational is an important book. Full of valuable and entertaining insights that will make an impact on your business, professional, and personal life.
Jack M Greenberg, Chairman, Western Union Company, retired Chairman and CEO McDonald’s Corporation
|Predictably irrational is clever, playful,humorous, hard hitting, insightful, and consistently fun and exciting to read.
Paul Slovic, founder and President of Decision Research
|The most difficult part of investing is managing your emotions. Dan explains why that is so challenging for all of us, and how recognizing your built-in biases can help you avoid common mistakes.
Charles Schwab, Chairman and Ceo, The Charles Schwab Corporation
|Freakonomics held that people respond to incentives, perhaps in undesirable ways, but always rationally. Dan Ariely shows you how people are deeply irrational, and predictably so.
Chip Heath, Co-author Made to Stick, Professor Stanford Graduate School of Business
|This is a killer book. Managers who want to really understand their customers (and themselves) must read “Predictably Irrational,” and make sure that everyone else in their organizations read it as well.
Chunka Mui, Fellow, Diamond Management and Technology Consultants, and co-author of Unleashing the Killer App.
|Predictably Irrational is a fascinating book–I kept trying to stay away from it but couldn’t help myself. It’s the work of a social scientist, and the experiments described are balanced and brilliant, but the style and voice of the author is that of a story teller. This is a book about human nature itself–what a strange lot we are, and how lucky we are to have Dan Arielly among us.
Michael Ruhlman, Chef, journalist and author of, among other books, The Elements of Cooking: Translating the Chef’s Craft For Every Kitchen.
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