Predictably Irrational: The Hidden Forces That Shape Our Decisions Author: Dan Ariely ASIN: 006135323X Binding: Hardcover List price: $25.95 USD Amazon price: $15.57 USD

Behavior Economics Book

This was a fascinating introduction for me to Behavioral Economics. The author conducts several easy to understand experiments to explore some of the less explainable sides of Economic Theory. The author refers to his explanation of difficult to explain data as "irrational". His word usage has irritated subscribers of conventional Economic theory. The traditional explanation of Economic behavior suggests that all decisions are calculated rationally. The unpredictability of rational preferences has more to do with unstated beliefs than from being "irrational".

The argument that Ariely wants to make is that not all economic behavior is rational. Sometimes, he argues, that we humans are irrational. His conclusions are that our irrational behavior is systematic and predictable. Since, our irrational behavior is predictable, then we can take steps individually and as a society to curb our irrational decisions so that we get our rational desired outcome. This conclusion is optimistic and seems to be hiding an agenda one step removed from the Nanny State. Ariely doesn't sufficiently convince me that incoherent behavior is the same as irrational behavior. Either way his studies bring to light a lot of important economic norms that demand attention. His book is fascinating. It is full of descriptions from experiments he designed and conducted. His experiments range from the conditions necessary to encourage or discourage cheating to how our choices change when we order in a restaurant in a group setting vs. privately. The results were all fascinating and were worth the read. His interpretation of the results, however, weren't very persuasive. In order for him to convince me that irrationality was the explanation of the data, then, he should have shown why a traditional explanation couldn't possibly reconcile the information with their theories. For Example: In one study of cheating he showed how contextualizing a morality made all the difference in whether participants cheated or remained honest. They showed this by having participants recall as many of the Ten Commandments prior to the test. (Later, they used an agreement that participants sign stating that they agreed to following the MIT Honor Code). When the ethical context was part of the participant's experience with the test, they, would not cheat. However, when they removed the test from any such reminders and made it easy to cheat, then, participants only cheated a little. Finally, when they removed the reward of cheating from an obvious reward (like a token that could be exchanged for the monetary reward) cheating became rampant.

I don't understand why the behavior of the test participants is best explained by "irrationality". Why can't a "rational" person just as easily justify cheating when it's one step removed from a monetary reward? There exist a possibility that the author is correct I just didn't walk away from the book agreeing that irrationality best explains some of humanity's less coherent behaviors.

Regardless of the author's conclusions of the data, the data itself was fascinating. Anyone interested in studying Economics, Psychology, Marketing, or Philosophy ought to read Predictably Irrational to contemplate how we ought to reconcile the author's data.