Ariely discusses the systematic (as opposed to random) irrational behavior of people and how they tend to repeat them. He draws deeply from the field of Behavioral Economics, an amalgamation of both Psychology and Economics.
1. Truth About Relativity (why everything is relative; even when it shouldn’t be)
2. The Fallacy of Supply and Demand (why the price of pearls – and everything else – is up in the air
3. The Cost of Zero Cost (why we often pay too much when we pay nothing)
4. The Cost of Social Norms (why we are happy to do things, but not when we are paid to do them)
5. The Power of a Free Cookie (how free can make us less selfish)
6. The Influence of Arousal (why hot is much hotter than we realize)
7. The Problem of Procrastination and Self-Control (why we can’t make ourselves do what we want to do)
8. The High Price of Ownership (why we overvalue what we have)
9. Keeping Doors Open (why options distract us from our main objective)
10. The Effect of Expectations (why the mind gets what it expects)
11. The Power of Price (why a 50-cent aspirin can do what a penny aspirin can’t)
12. The Cycle of Distrust (why we don’t believe what marketers tell us)
13. The Context of our Character (why we are dishonest and what we can do about it; why dealing with cash makes us more honest)
14. Beer and Free Lunches (what is Behavioral Economics and where are the free lunches)
As opposed to Malcolm Gladwell who presents research to back up his hypothesis, Ariely conducts experiments to prove a point. Ariely writes, “If the lessons learned in any experiment were limited to the exact environment of the experiment, their value would be limited. Instead, I would like you to think about experiments as an illustration of a general principle, providing insight into how we think and how we make decisions – not only in the context of a particular experiment but, by extrapolation, in many contexts of life.”
Which brings me to my perceived weakness of this book. The experiments were generally conducted in specific environments, i.e., ivy league universities, which make extrapolation highly suspect. I would have liked Ariely to conduct the same experiment with people of different cultural backgrounds, age groups, and income brackets before pronouncing his conclusions. But of course if Ariely did this, he would have ended up with a technical paper and not a reader-friendly 348-page work.
The value of this book is essentially that it points out the irrational and costly decisions people make and what they can do about this. Ariely and Behavior Economics notwithstanding, I don’t think I will be boycotting Starbucks anytime soon though.
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