Predictably Irrational (The Hidden Forces That Shape Our Decisions) by Dan Ariely

This book is about behavioural economics. Humans are susceptible to systematic biases and heuristics.

Chapter 1: The Truth About Relativity (Why Everything is Relative – Even When It Shouldn’t Be) – People like to look for comparables. Everything is relative. Beware of such decoys.

Chapter 2: The Fallacy of Supply and Demand (Why the price of pearls – and everything else – is up in the air) – The initial price forms a strong anchor. People tend to go for items that are rare. Humans tend to fall into behavior herding.

Chapter 3: The Cost of Zero Cost (Why we often pay too much when we pay nothing) – People are sentimental towards items they own. This is the zero price effect. People like freebies, even though there might a hidden cost to it.

Chapter 4: The Cost of Social Norms (Why we are happy to do things, but not when we are paid to do them) – For volunteer work, giving people money can actually de-motivate them.

Chapter 5: The Influence of Arousal (Why hot is much hotter than we realize) – Make decisions in a calm state and not in a state of arousal.

Chapter 6: The Problem of Procrastination and Self-Control (Why we can’t make ourselves do what we want to do) – Deadlines are the cure for procrastination. Let people set their own deadlines.

Chapter 7: The High Price of Ownership (Why we overvalue what we have) – beware of the endowment effect. This is why people over-pay at auctions.

Chapter 8: Keeping Doors Open (Why options distract us from our main objective) – learn to let some options expire. The Paradox of Choice. Start by closing small doors.

Chapter 9: The Effect of Expectations (Why the mind gets what it expects) – People tend to listen to what others say before the event occurs. This is how expectations are formed. This can lead to stereotypes etc.

Chapter 10: The Power of Price (Why a 50 cent aspirin can do what a penny aspirin can’t) – Placebos can work sometimes; Are lower benefits associated with cheap goods?

Chapter 11: The Context of Our Character, Part 1 (Why we are dishonest, and what we can do about it) – People tend to be honest only when it suits them. However, people are not all out cheats.

Chapter 12: The Context of Our Character, Part II (Why dealing with cash makes us more honest) – people cheat less when they deal with money. However, they may cheat with items of high monetary value instead.

Chapter 13: Beer and Free Lunches (What is behavioral economics, and where are the free lunches?) – People have a high need for uniqueness. Step up your vigilance when making important decisions


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