Friday Book in a Page: Predictably Irrational

If you have been listening to me for any span of time, and especially if you have attended one of my branding or marketing strategy courses, you know that I am somewhat obsessed with how the human brain makes decisions. And, you likely remember that on a personal level, I have been slightly annoyed by the irrefutable science that tells me that as rational and logical as I like to think that I am, that I, too, just like every single one of us, makes decisions ‘Emotion first. Logic second’. 

One of the first sources that led me down this road of exploration was an article by Dan Ariely. Ariely is a professor of psychology and behavioural economics at Duke University, and his entire field of study is decision-making - specifically how people make choices in a variety of contexts. This works adds a layer of sociology to the studies of psychology and economics to understand and explain how our decisions are influenced by various factors - like emotions, social norms, cognitive biases etc. 

And the application of this work? Well, I love that! Essentially, by understanding how people make decisions, behavioural economists aim to develop strategies and interventions to help individuals and organizations make better choices and achieve better outcomes. Who doesn’t want that?

In addition to numerous articles, talks and interviews, Ariely has written several books on the subject, including Predictably Irrational, The Honest Truth About Dishonesty, and Payoff, he is also the founder of the Center for Advanced Hindsight, a research lab that applies insights from behavioural economics to various real-world problems.

If not just for the title, Predictably Irrational is one of my favourites. And, if you’ve ever wondered why we think branded pain medication is more effective than house brands, or why the words “free shipping” is such an emotional trigger, then maybe this book will be one of your favourites too. 

Essentially it explores how we think we make rational decisions based on logic and reason, but in reality, our emotions, biases, and irrational tendencies heavily influence our choices.

Key Messages:

1. The Role of Social Norms: We often make decisions based on social norms, even when they don't align with our personal values or beliefs.
2. What’s the Context: Our perception of the value of something is heavily influenced by the context in which it's presented.
3. The Value of Free: We're willing to pay more for something we perceive as "free" than for the same item with a small cost.
4. The Power of Accountability: We're more likely to follow through on a commitment if we make it in front of others.
5. When Things are the Problem of “Future You”: Our decision-making can be heavily influenced by the presence or absence of immediate consequences.

But here's the thing, understanding our irrational tendencies doesn't mean we can eliminate them altogether. However, recognizing our biases and tendencies allows us to make more informed decisions and be more intentional about our choices.