My short notes on Predictably Irrational, by Dan Ariely. An excellent book. Entertaining, and covers much fascinating ground from social psychology and behavioral economics. Some of the experiments Dan and his team designed are fiendish!
Value is relative
We only know what we want when we see it in context. The bike the Tour de France winner rides. A set of speakers compared to another.
We only know what something is worth, or how much we like it, when comparing to other similar things (purchases, partners, jobs, etc..
We tend to choose the middle option. A high price option on a restaurant menu increases average order price, because it makes the rest seem cheap in comparison.
As an Amazon reviews says, “arguably the best book ever on what is increasingly becoming the science of persuasion.”
If you want to understand why you felt compelled to give money to a Hare Krishna devotee, how car salesman or realtor’s work, and much more, you should read this.
It’s also a very easy and enjoyable read. These are my notes. They cover all the content in the book, but don’t link to research. In the book, most of the statements have links to research papers to back them up.
We can process incoming information cognitively in one of two ways:
Controlled responding, which is subjecting information to a thorough analysis. This is when we think a problem through, research it, etc. We only do this if we have the desire and the ability. It is intellectually taxing and time consuming.
Use judgmental heuristics such as:
Price as surrogate for value. Applies particularly to items which are hard to value: Wine, jewelry, art, employee salaries, etc.
Trust experts. This is why pseudo-science books always have ‘PhD’ or ‘MD’ after the author’s name.
Because – we want reasons to do something, even bogus ones.
By Thomas Gilovich, social psychologist and CSI Fellow, this well written book explains some of the reasoning and deduction errors we make when trying to understand the world, and ways to avoid making those errors.
This is an easy and engaging read, and offers several straightforward techniques to avoid making common reasoning errors. I recommend you look up How We Know What Isn’t So: The Fallibility of Human Reason in Everyday Life
in your local library, or get it second-hand from Amazon for less than a posh cup of coffee.
These are my notes / summary of the book.
I. Cognitive determinants of belief
2. Something out of nothing: The mis-perception and misinterpretation of random data
We are predisposed to see order, pattern, and meaning in the world, and we find randomness, chaos, and meaninglessness unsatisfying.
As a consequence we tend to ‘see’ order where there is none, and we spot meaningful patterns where only the vagrancies of chance are operating.
I recently received an advert for an investment fund in which, as the amateur social psychologist that I am, I noticed illustrated a couple of psychological principles. The are both covered in the email title:
Last chance to invest in a firm favourite
They are covered again in more detail in this paragraph:
The x y z Fund only launched six months ago, but has already attracted considerable interest. To keep it small and flexible the number of units has been capped at 200 million. Last week they had reached two-thirds of that total and interest is intensifying. In the last two days alone they sold over 6 million units, so it is likely to close very soon.
in a survey of 1,506 people last year by Nationwide Mutual Insurance, 81 percent of cellphone owners acknowledged that they talk on phones while driving, and 98 percent considered themselves safe drivers. But 45 percent said they had been hit or nearly hit by a driver talking on a phone.
That’s the Lake Wobegon effect, the tendency for overestimate their capabilities in relation to others.
I nuked my Linkedin account at the same time I left Facebook. Linkedin is supposed to be a business networking service, and I had about 350 contacts there, but I always found that service utterly useless, so it was a no-brainer to dump it.
End update
I’m on LinkedIn, I’m connected to 48 people. I go there, I declare to the world that I know these people. And then what?
If that sounds familiar, you’re not alone. There’s:
In the prologue to The Science of Fear, by Daniel Gardner (published as ‘Risk: The Science and Politics of Fear’ in the United Kingdom, Australia and Canada), which I have just started reading, as he talks about the aftermath of the 9/11 terrorist attacks in the United States:
When I first got my own server (a virtual private server with Linode which I highly recommend), I ran every Internet service I needed on it, and several for my friends. Over time, I gradually started replacing what I had with online services – I stopped running my own e-mail server and started using GMail, I stopped running my own gallery and used Flickr.
Now I really rely on those services, so I got to thinking what I would replace them with if one of them was no longer available, or appropriate. Here’s what I would use:
from your local library, this has sold so many copies they are bound to have some.
in your local library, or get it second-hand from Amazon for less than a posh cup of coffee.
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