Reading: Predictably Irrational

Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely

Over 200 year ago, Adam Smith already knew that the economist should not ignore emotions, feelings and morality as aspects of human behavior, but instead treat them as topics worthy of investigation. In the aftermath of the financial crisis, it seems that many economists overlooked this word of advice and relied solely on their models.

Human behavior is not as simple as many believe, and when dealing with crisis, it becomes irrational. However, Dan Ariely argues that this irrationality can be predicted and he amply demonstrates that in this book.

This book explains why humans, who are supposedly rational beings, make seemingly irrational decisions. The author describes many scientific experiments, and thus proves that these irrational decisions are many times very predictable, hence the title. He discovers that given the opportunity, we will all cheat a little (ever brought a pen home from the office?) but reading the Ten Commandments beforehand will make us more honest. He explains why we are sure that the devaluation of our own home is less than that of the overall market and that in a sports match we think the ball is in, while our neighbor, who roots for the other team swears it is out.

If you are interested in the workings of the human mind, in the rational versus the emotional, or if you have always assumed that you make rational decisions, this book is for you. By the way, if you like his writings, you can also pick up a copy of his latest book The Upside of Irrationality.