Predictably Irrational

This week in Product Book Club, we read Predictably Irrational by Dan Ariely. I read this book exactly a decade ago. It was fun to re-read the book again. This time, I learnt a lot more than the first time.

If you are excited about human behaviors and decision making process, this book is for you. Dan shares his curious questions, design of experiments, learnings from the experiments, process of decision making and quirks in a narrative style. The author shows how irrational we are and predictably so with a series of experiements throughout the book.

The book has about 304 pages and 70000+ words. By typical calculations, it takes about 4 hours to read that too if you read at 300 wpm speed. Beleive me, it takes much longer than that to read this book. The reason being, the idea density of the book is high and the concepts are hidden in the narratives.

If you don't have that kind of time, spend 10 mins to read about the most important ideas I gathered from my personal life below. Treat this as a cheat sheet of human behaviors. Let's dig in 👇


The first shocker to me is: Human decisions and actions are often divorced from rationality. I tested every concept from the book with my personal life and I declare that we are irrational and that is crazy.

The good news is: By understanding why we fail to reason properly, specifics of our irrational quirks and foibles, we can retrain ourselves to make better decisions.

  1. As human beings we often look at things around us in relation to others. That is how we understand less/more, tall/short, right/wrong etc. Comparision is inevitable.

    For eg: In my previous stint as an edupreneur, I lined up my CBC (cohort based course) offerings as Core Edition (₹1.5Lacs), Portfolio Edition (₹2.5 lacs) and Lifetime Edition (₹5.0 lacs). I noticed that a number of students picked portfolio edition that year. None of them picked the lifetime edition.

    In the second year, we removed the lifetime edition (based on previous year learnings) and just offered Core & Portfolio editions. This time I noticed, a number of students picked Core Edition 🧐

    This irrational decision of my students was puzzling me for a long time and I got my answers last week. Behaviorally speaking, Lifetime Edition served as a decoy. It aided them to make a contextual decision. The absence of Lifetime edition made students choose a different option. That is the  power of decoys. It can be used for manipulation as well. Beware.
  2. Our first impressions matter. We imprint our impressions and decisions on our Anchor (the first thing we get exposed to).

    For eg: I got my first linen shirt from Marks & Spencer in 2017. I liked the shirt. It fit me well. The cost was ₹2599/shirt. Now, I have a wardrobe full of M&S shirts only 🤷‍♀️
  3. My first shirt purchase at M&S was by chance. The initial price (my willingness to pay) was arbitrary. But once the price got established in my mind, it not only shaped the present prices but also the future prices (logical coherence).

    A friend of mine got bored looking at me in only M&S shirts, took me to H&M and showed me great shirts at ₹999 but I still could not let go of M&S. She got fed up and took me to Vero Moda and showed me expensive shirts better than M&S. I still could not let go. My tailor stitched me amazing shirts using my M&S shirt fit, but I still feel nothing beats M&S. This is a true story. My arbitrary coherance starts with M&S and I logically compare every shirt against it to make decisions till date.
  4. I landed in USA for the first time. It was my first day at office. My jet lag was killing me. I saw a number of people queuing up in the coffee place downstairs and I assumed, the coffee must be awesome there, so I also joined them (Behavior herding). Gosh! the coffee was so bitter and I regretted it all afternoon.

    The next day, I walked around the I-street in D.C. I spotted Starbucks. I walked into the store and asked for a milky coffee (like a south-indian filter coffee). I loved the coffee (cappuccino) and the coffee experience. From that day, I went to Starbucks everyday (Self Herding) for the next 5 years and I spent almost $8 on coffee everyday. My collegues were suprised that I was spending so much on coffee. Later I came to know that, the pour in our office was free 🙈 and I still went to Starbucks (habitually).
  5. Zero price effect got to me many times. The 4 letter word (FREE!) that makes us pay too much even when we pay nothing is dangerous.

    I wanted to buy ONE soft bristles tooth brush. I did all my research and was set to buy Trisa brand. In the aisle, I saw a toothbrush that said, if you buy one, the other is free. Even when I did not want two brushes, because it was free I bought the two toothbrushes (and kept one unused for months together) 😅.
  6. I still remember an incident that happened in the early days of my career. We bought a new home and to celebrate the occasion, I invited a few work collegues home. We had a barbecue dinner. It was a gala evening.

    Post the wine and dine, one colleague walked upto me, handed over $20 and thanked me for all the good food. I was shocked with this act. I felt so helpless, angry and belittled that night. Till date I can't speak to him properly. He mixed up social norms and market norms badly and the scar is still deep. Never do this to your friends/family.
  7. This happened 6 years ago. My nephew along with his 4 friends went for a weekend holiday to a nearby hill-station. He took my brother's car. He has driven the car at a really high speed, blaring sound systems, adrenaline pumping decibels, eatables and good laughters. In that hot state, he drove the car at a crazy speed only to meet with an accident and loose 2 of his dear friends. He spent the next 10 months in bed getting healed from multiple fractures.

    When you are in a hot state (excited state/aroused state) don't take decisions. All rationality fades away. Lives would be saved, if the car could recognize the excited state of my nephew and alert others at home that moment.
  8. Giving up on our long term goals for short term gratification is procrastination. It is similar to how emotions grab hold of us differently in the cold and hot periods. I am a perpetual procrastinator till date. Procrastination is real and we all procrastinate. Tightly restricting freedom is the best cure. Pre-commiting to deadlines socially helps with accountability.

    Pre-publishing the reading schedule and promising to review one book every week as a book club is one way to beat procrastination and get to action.
  9. Ownership sucks. When we own something, we fall in love with what we already have (Endowment Effect). Also, we focus on what we may lose, rather than on what we may gain (Loss aversion). We begin to feel ownership even before we own something. We can't lose auctions for this reason. Ownership changes our perspective. It makes us rigid. It is hard to downgrade and move back to pre-ownership state. Be aware.
  10. When we believe beforehand something will be good, it generally will be good and vice-versa. If we set expectations upfront, generally people end up agreeing with you. Universe is not conspiring. It is your sheer biology.

The book has 70+ more fascinating ideas in it. If you want to read chapter-wise notes (4000+ words) version here you go.

🥂 to better decisions!

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