Predictably Irrational: The Hidden Forces that Shape Our Decisions
by Dan Ariely
read by Simon Jones
I took a couple of courses in grad school about the information business, which is a growing industry that deals with the interesting paradox of having to use information as both a marketing tool and a product. It’s fascinating and complex, but was also my first introduction as an adult to standard economic theory.
Both my immediate and ongoing reaction is: standard economic theory is idiotic. It’s just blatantly false, based on two assumptions: 1. All decisions made by individuals are rational. 2. All those rational decisions are made with the primary goal of increasing that individual’s personal financial wealth.
Standard economic theory has a real hard time trying to explain nonprofits. Or, you know, families and friends.
Ariely is one of the active researchers opening up a new field of study: Behavioral economics. This is a field that comes out of psychology more than economics, and it looks at how people actually make decisions. (And is something of a balm to my soul after trying to comprehend what regular economics think.)
How do biases work, or habits form? How do our decisions change when we have an audience or not? Rather than always acting rationally, how do we rationalize some of our less acceptable behaviors?
He studies this, and he does so through a series of small experiments. (His students at MIT should really have started to be suspicious of some of his odder requests. And I imagine the neighborhood kids roll their eyes at this point.)
It’s an excellent book, with a great deal of humor to it, but also caused a certain amount of introspection as I thought about how I make my own decisions, and a certain amount of horror, given the current political state of my country, in regards to how politicians make their decisions.
I highly recommend this book. My three word review: funny, fascinating, and important.