Tuesday, February 26, 2008

Dissecting People's 'Predictably Irrational' Behavior

NPR interviews (with audio) Dan Ariely, author of Predictably Irrational: The Hidden Forces That Shape Our Decisions:
As a behavioral economist, Dan Ariely studies the way people make economic decisions.

His conclusion? We don't do it the way economists typically say we do.

Instead, he finds, humans are "predictably irrational," which is also the title of his latest book.

Predictably Irrational explains how the reasoning behind those decisions is often flawed because of the invisible forces at work in people's brains: emotions, expectations and social norms.

"Our willingness to pay, it turns out, is not just a function of the utility of the pleasure that we expect to get from [the item], it's also influenced by all kinds of irrelevant factors that change our psychology but not our economic reasoning," Ariely says...
Update: NYT article: The Advantages of Closing a Few Doors


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