Predictably Irrational — Book Review

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Cross-posted from Goodreads.

I got my introduction to behavioral economics four years ago in a WhatsApp book club. Behavioral economics studies how human behavior is influenced by economics and vice-versa. Someone had posted the Nobel prize acceptance speech of Richard Thaler on the group (it’s a great speech, you should watch it). It was relieving to know that I wasn’t the only one making irrational decisions all the time. The world is full of irrational decision makers: me, probably you, and almost everyone else.

I was so intrigued by Thaler’s economic theories that I soon ordered Thinking, Fast and Slow. I haven’t read it yet, but as far as I can tell, it’s an account of cognitive biases we all harbor while making everyday as well as life-changing decisions. I received Predictably Irrational: The Hidden Forces That Shape Our Decisions as a gift from my secret Santa last year.

The central idea in the book is that although humans like to think of themselves as highly rational beings, they mostly end up making decisions that can only be described as counterintuitive or irrational. The good news is that we make irrational decisions in very predictable ways. So, it’s possible to learn our own unconscious biases to make better decisions.

Rather than offer a succession of boring economics and psychological theories, Ariely has presented detailed accounts of experiments that he and his colleagues undertook to prove or disprove their hypotheses about how pricing, morality, social norms, and prior knowledge influence us humans in our decision-making. I found the chapters on supply and demand, placebo effect, and dishonesty thought-provoking.

It’s adorable how the author has passionately put his various experiments into words. His zeal for the empirical clearly shows. I enjoyed this book and learned a great deal about the factors behind my own irrational decisions.

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