Predictably Irrational

Dan Ariely, in the book Predictably Irrational shows us how people are not just irrational, but irrational in a consistent way:

- adding an expensive option, increases sales of the moderate expensive one;

- we evaluate our income/wealth more as a relation to our peers than in actual numbers;

- anchoring on any information leads our estimations and old prices anchor us to new situations;

- a cost of zero, makes the item irrationally attractive, to the detriment of opportunity cost and other alternatives;

- social norms cannot be mixed with market norms;

- something for free makes us more altruistic than a low price;

- we underestimate the effect of arousal on our decisions;

- once we own something, we value it much more;

- we value having options more than those options give us;

- more expensive food, wine, placebos, have a better effect than cheap ones;

- expectation greatly influences our experience and enjoyment;

- procrastination can be addressed with imposed schedules (but not self-imposed variable ones);

- in order to achieve long-term goal, it must be tied to short-term rewards that compensate for the short-term effort.

It's fascinating to see how advances in psychology uncover hidden forces which guide us in predicable ways.