Books in Bytes
All 16 learnings · one per slide
Predictably
Irrational
Dan Ariely, in bytes
16 key learnings on the hidden forces that shape our decisions in predictable ways.
16 learnings · ~40 sec eachSwipe →
Library / Mind & Psychology / Predictably Irrational
Predictably Irrational, in bytes
16 key learnings from Dan Ariely's book on behavioural economics: the systematic, predictable ways we make irrational choices. Each takes about 40 seconds to read. Swipe, use the arrows, or your keyboard.
Predictably
Books in Bytes
Learning 1
Everything Is Relative
The idea
We rarely judge value in absolute terms; we compare with what's nearby.
Example
A £20 saving feels big on a £40 purchase and trivial on a £2,000 one, though it's the same money.
Takeaway
Notice what you're comparing against.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 2
The Decoy Effect
The idea
Adding a clearly inferior option makes a similar, better option look more attractive.
Example
The Economist offered web-only, print-only and print-plus-web, with print-only priced the same as the bundle. The decoy pushed people to the bundle.
Spot it
A medium popcorn priced almost like the large.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 3
Arbitrary Anchors
The idea
A random first number can anchor what we're willing to pay.
The evidence
Ariely reports students who wrote down the last digits of their social security number then bid more for items when those digits were high.
Takeaway
Be wary of the first number you hear.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 4
Arbitrary Coherence
The idea
Once anchored, our later choices stay consistent with that first anchor.
Example
Ariely suggests Starbucks escaped comparison with cheap coffee by creating a new experience.
Takeaway
First prices shape all later ones.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 5
The Power of Free
The idea
'Free' makes us forget the downside; we choose free options even when a cheap one is better value.
Example
When a cheap chocolate became free, people abandoned a much better chocolate offered at a small price.
Spot it
Queueing an hour for a free giveaway.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 6
Social Norms vs Market Norms
The idea
Friendly requests run on social norms; paid ones run on market norms. Mixing them can backfire.
Example
Offering to pay your mother-in-law for Thanksgiving dinner would insult her.
Takeaway
Money can change the meaning of a relationship.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 7
Fines Can Backfire
The evidence
At Israeli day-care centres, a fine for late pickup increased lateness. Parents saw it as a fee, not a moral obligation.
The idea
Once social norms are replaced by market norms, they're hard to restore.
Takeaway
Think before pricing behaviour.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 8
Arousal Changes Us
The idea
In emotional states, people predict their own behaviour badly and decide differently.
Example
Ariely's studies found people's answers about risky choices changed when they were aroused.
Takeaway
Don't make big decisions in the heat of the moment.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 9
Procrastination and Deadlines
The evidence
In Ariely's classes, students with evenly spaced, imposed deadlines did better than those who set their own or had one final deadline.
The idea
We know we procrastinate but don't fully correct for it.
Try this
Set firm interim deadlines for big tasks.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 10
The Endowment Effect
The idea
We overvalue what we own simply because we own it.
The evidence
Duke students who won basketball tickets in a lottery valued them far more than those who didn't.
Takeaway
Ownership distorts value.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 11
Keeping Doors Open
The idea
We waste effort keeping options open, even when it costs us.
Example
In a game, people kept clicking to stop doors vanishing, losing money they could have earned in the best room.
Takeaway
Closing some doors lets you focus.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 12
Expectations Shape Experience
The idea
What we expect changes what we perceive.
Example
People rated a beer with added vinegar worse only when told about the vinegar beforehand.
Takeaway
Expectations colour reality.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 13
Price Changes Effect
The evidence
In one study, people reported more pain relief from a placebo pill described as expensive.
The idea
Price signals quality, even when it shouldn't.
Takeaway
Price shapes perceived value.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 14
Small Dishonesty
The idea
Many people cheat a little when they can, while still seeing themselves as honest.
Example
Reminders of ethical codes reduced cheating in some of his studies.
Worth noting
A later dishonesty study Ariely co-authored was retracted over data problems.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 15
Beer and Free Lunches
The idea
In group ordering, people choose differently to stand out, then enjoy their choice less.
Example
Diners ordering aloud avoided the same beer as others, even if they'd have preferred it.
Takeaway
Order before hearing others when you can.
Predictably Irrationalbooksinbytes.in
Books in Bytes
Learning 16
Irrational, But Predictable
The idea
Because our errors are systematic, we can design environments and policies that counter them.
Example
Automatic savings plans that work with human nature.
Takeaway
Predictable mistakes are fixable.
Predictably Irrationalbooksinbytes.in
Books in Bytes
All 16 learnings complete
That’s all 16 learnings.
Our mistakes are predictable, so they're fixable. Which one will you catch yourself making this week?
Abhay Kumar JaiswalFCA · PMP® · Workday Financeabhayjaiswal.com
Summaries in my own words. Read the book for the full stories.
1 / 18
Summaries are written in my own words for learning. Read Predictably Irrational by Dan Ariely (2008) for the full stories. Some studies Ariely reported, including a later one he co-authored, have since been questioned or retracted; treat individual findings with care. More Books in Bytes