Friday Book Review: Predictably Irrational by Dan ArielyAditya Bhushan Dwivedi
While most of the decisions in our daily life are logic driven and often we feel the need to logically justify them. Predictably Irrational takes the reader through a different ride of behavioral economics and shows us the subtle factors which heavily influence our decision making process.The book is authored by Dan Ariely, who is a world renowned Behavioral Economist and also a ted speaker. Dan has been studying behaviors and influences for over 20 years now. He is the founder of Centre for Advanced Hindsight and a Visiting professor at MIT Media Lab. He currently is James B Duke professor of Behavioral Economics at Duke University.
Dan ventured into the field of behavioral economics after an accident and then the time he spent in hospital led him to observe people and the influences which slowly attracted him to this field and somehow this became his life path. In the book he talks about various tests and research based experiments and surveys and how they helped him to reach the conclusions.
The Book makes for a great and interesting read and nearly every chapter from the book can be applied to real life. A lot of things which one might not be able to explain and just names it as “gut feeling” are explained in a very lucid and clear way.
Although it was extremely difficult for me to point out one or two chapters from the book as each chapter provides a very different but extremely valuable insight, but I have already started using lessons from Chapter 1 - “The Truth about Relativity” and chapter 4 - “The cost of Social Norms” and slowly moving toward others.
For instance in first chapter - “The Cost of Relativity”, The author tells us about the how prices of different commodities are kept relative to each other and keeping a costlier product next to a product which costs less can make the cheaper product look like a bargain and thus help the product sell. In another example he talks about how making the salaries of CEO's public in US has led to competition and resulted in huge jump in salaries of top executives in the companies.
In fourth chapter Dan talks about the cost of social norms and how to keep the delicate balance between social norms and market norms. He also talks about how measuring every exchange in terms of money can be a big mistake. And why relationship building with clients is really important and helps build goodwill, while the same thing can backfire badly and leave a bad reputation in market if not handled properly with lots of analogies and examples about the same.
From a startup perspective this book is immensely useful, whether it comes to pricing your products/services or Marketing them, this book gives you insights you never had and results you never expected to get.
The book is medium paced and very sticky which makes it very difficult for a habitual reader to leave it mid way. Read the book this weekend to for an insightful and a new perspective on people's behavior and reasons behind why they do certain things even when it doesn't sound that logical.