Prof. Morty Yalovsky
April 16th, 2012
Predictably Irrational by Dan Ariely: A Novel Analysis
You are surfing the Internet when you come across an ad on the Economist.com: ‘SUBSCRIBE NOW!’ The first offer reads – an Internet subscription for $59. The second continues: ‘a print subscription for $125. And the final offer: ‘A print AND Internet subscription for $125.’ Which offer would you choose? Today’s market is based upon the idea that humans are rational and are capable of making sensible decisions. This provides the foundation for economic theories and predictions. In Predictably Irrational, author Dan Ariely offers a powerfully contrasting view. He argues that, “We are really far less rational than standard economic theory suggests. Moreover, these irrational behaviors of ours are neither random nor senseless. They are systematic, and since we repeat them again and again, they are as well predictable.” Ariely proves why the majority of customers will choose the third offer over the first two, whether or not they need both the print and Internet subscription. Ariely’s strong statistics coupled with his persuasive narrative offer significant insight into the behaviors of humans and the economy, and provides valuable lessons for businesses. He builds his case through the presentation of numerous statistics, experiments, and personal anecdotes that corroborate his theory. In addition, his status as the James B. Duke Professor of Behavioral Economics at Duke University provides the reader with a strong air of credibility. Ariely proves how expectation, social norms, procrastination, distrust, and a ‘free lunch’ can influence our decisions. The examples are extensive; this is an example that made a strong impression. Chapter eleven explains ‘The Power of Price: why a 50-Cent Aspirin Can Do What a Penny Aspirin Can’t.” This Chapter is about the use of placebo mechanisms. One of the earliest recorded examples of the placebo effect took place in...
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