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Predictably Irrational

Predictably irrational is one of those book you read and you constantly look back on yourself saying: “Hhmmmm, I guess I do that too….”

If I had to summarise this book to a friend in one sentence I would say:


“It turns out we don’t know ourselves as well as we think we do and we aren’t really as rational as we would like to believe we are.”

Predictably Irrational: The Hidden Forces that Shape our Decisions is written by Dan Arialy. Arialy is a social scientist and these guys probably have one of the coolest jobs in the world, if you ask me. They sit around and come up with experiments to analyse how people behave and whether we really are as rational as we would like to think we are.

In this article I’m going to highlights just a few of the experiments that are mentioned in the book. These are really fun to think about and also to reflect back on yourself and think about how you would have acted.




The first experiment mentioned in the book and also the one I chose to cover in the video above is called relativity. If you’ve already watched the video I’m not going to go in to too much detail on this one. The basic idea as laid out in the book is as follows:

humans rarely choose things in absolute terms . We don’t have an internal value meter that tells us how much things are worth . Rather , we focus on the relative advantage of one thing over another , and estimate value accordingly”

“most people don’t know what they want unless they see it in context.”

“We don’t even know what we want to do with our lives — until we find a relative or a friend who is doing just what we think we should be doing.”

Now think about that for a moment. What are you doing with your life a the moment and why are you doing it? Who was that person you saw and thought “Wow, that is what I want to do one day.” Was the picture you got of their life a true reflection? Was it actually the way you envisioned it to be when you achieved it?

I’m going to guess that for a lot of people the answer to the last question is, No. With social media, and life in general, we rarely get the true picture. So it’s a valuable lesson to learn knowing that your mind automatically compares things/ experience/ life to others to estimate its value. Once you know this you can start asking yourself whether this value is a true comparison.

“Oh John has a lot more money than I do”

Yes if you compare money to money, John wins. But how is John doing on his relation ships, how many friends does he have and how is his physical health? I’m pretty sure when you compare the full picture you might have a different opinion. Stop comparing things that shouldn’t be compared. And when you compare start realizing what you are doing.

Herding and Self herding

Herding is when we base our decisions on what other people are doing. “Oh there’s a line outside this restaurant, it must be good if people are willing to stand in line to get in.” But what is even more interesting is self herding. Take this example from the book and think about your first introduction to Starbucks. Did you think it was good because other people told you so (herding) or was it self herding:

“Recall your first introduction to Starbucks, perhaps several years ago. (I assume that nearly everyone has had this experience, since Starbucks sits on every corner in America.) You are sleepy and in desperate need of a liquid energy boost as you embark on an errand one afternoon. You glance through the windows at Starbucks and walk in. The prices of the coffee are a shock—you’ve been blissfully drinking the brew at Dunkin’ Donuts for years. But since you have walked in and are now curious about what coffee at this price might taste like, you surprise yourself: you buy a small coffee, enjoy its taste and its effect on you, and walk out. The following week you walk by Starbucks again. Should you go in? The ideal decision-making process should take into account the quality of the coffee (Starbucks versus Dunkin’ Donuts); the prices at the two places; and, of course, the cost (or value) of walking a few more blocks to get to Dunkin’ Donuts. This is a complex computation—so instead, you resort to the simple approach: “I went to Starbucks before, and I enjoyed myself and the coffee, so this must be a good decision for me.” So you walk in and get another small cup of coffee. In doing so, you just became the second person in line, standing behind yourself.”

Now think about the previous decisions you have made in your life. Could it be that you made decisions very simply, like walking in to that Starbucks the first time, and ever since you’ve been standing in line behind yourself. Assuming that your first decision was smart. What if you reconsider that initial decision?

“Could it be that we made arbitrary decisions at some point in the past .. and have built our lives on them ever since , assuming that the original decisions were wise ? Is that how we chose our careers , our spouses , the clothes we wear , and the way we style our hair ? Were they smart decisions in the first place ? Or were they partially random first imprints that have run wild ?”

The real question then becomes, “How do we stop ourselves from repeating these mistakes?” and the easy answer is:

“With everything you do , in fact , you should train yourself to question your repeated behaviors.”

The Cost of Zero Cost

Is something that is free really free?

Consider the following example. If somebody offered you a free $10 Amazon voucher or a $20 voucher for $5, which one would you pick? Through studies, it turns out that most people would pick the free option rather than the $20 option. However, if we were all perfectly rational we should have gone for the second option. You gain $15 compared to the $10, but the loss of $5 is a higher cost to us than the gain of $15.

A perfect example of this is Amazon’s free shipping. How many times have you bought those few extra items so you qualify for free shipping and what would the real cost of shipping have been? Does it justify those extra things you bough….. Similarly how many times have you gone in to a store looking for, say socks. You could have bought one pair of the really comfortable durable socks, but in stead you walk out with 3 pair of average socks because they were buy 2 get 1 free.

Free has a cost to it and free is also irresistible to people. Even if the value of the free item is negligible, our brains place a greater value on free.

So next time you can get something for free, think about the true cost of that “free”item….

The problem of procrastination

For this one Dan Ariely used his own students and used 3 different options on 3 different classes to see which one works best:

  1. No deadlines to hand in their 3 assignments. Students could choose to hand in assignments early, but the only requirement was to hand them in before the last day.
  2. Students set deadlines for themselves during the term for handing in the 3 assignments and were penalized if they did not meet these deadlines. You could still set a deadline of the last day of class for all 3 assignments, but most students spaced them out through the semester. 
  3. Strict deadlines were set by Ariely and students had to meet these deadlines.

Which of these groups do you think scored the best marks? And which one would you have picked? Would you set deadlines for yourself?

The results were that students with strict deadlines fared best, they did not procrastinate and kept up through out the term. Students with no deadline fared the worst, they procrastinated and ended up falling behind and handing in sub par assignments, even though they had more time. The students who set their own deadlines however, fared a lot better than the ones with no deadlines and only slightly worse than the ones with deadlines set by him.

Here’s Ariely to explain:

“What do these results suggest ? First , that students do procrastinate ( big news ) ; and second , that tightly restricting their freedom ( equally spaced deadlines , imposed from above ) is the best cure for procrastination . But the biggest revelation is that simply offering the students a tool by which they could pre commit to deadlines helped them achieve better grades .”

“Interestingly , these results suggest that although almost everyone has problems with procrastination , those who recognize and admit their weakness are in a better position to utilize available tools for precommitment and by doing so , help themselves overcome it .”

“What’s the bottom line ? We have problems with self – control , related to immediate and delayed gratification — no doubt there . But each of the problems we face has potential self – control mechanisms , as well . If we can’t save from our paycheck , we can take advantage of our employer’s automatic deduction option ; if we don’t have the will to exercise regularly alone , we can make an appointment to exercise in the company of our friends . These are the tools that we can commit to in advance , and they may help us be the kind of people we want to be .”

So where in your life can you use this? Everyone has a problem with procrastination. But where can you set deadlines for yourself to beat your own nature?

I really hope you enjoyed this article. I’ll be back again next week with my next book.