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  • 
    the book

    • Predictably Irrational
      The Hidden Forces that Shape Our Decisions
      

    • Dan Ariely
      • http://danariely.com/
      • @danariely
    • -Xv
      • read it during summer 2009
      • re-read and reviewed during fall 2010
  • 0. Introduction
    • author's background
      • severely burned at 18
        • 3 years in the burns unit
        • observed the world as an outsider
        • analyzed pain caused by bandage removal
      • his psychology professor
        • prompted him to design experiments when having
          different interpretations for known experiments
    • behaviour economics
      • draws on
        • psycology
        • economics
      • conventional economics
        • compute the value of all alternatives
        • follow the best possible path of action
        • have market forces fix errors
      • we are irrational
        • predictably
          • a starting point to improve our decision making
    • experiments described in the book
      • reader, what's in it for you?

  • 1. The Truth about Relativity
    Why Everything is Relative - Even
    When It Shouldn't Be

    • we rarely choose on absolute terms
      • we focus on relative advantage
      • most people don't know what
        they want unless they
        see it in context
    • decoy effect
      • add an option intended
        to make other options
        more attractive

        • The Economist subscriptions

        • an expensive dish
          in a restaurant
          • more sales for the 2nd one
        • #experiment with (un)photoshopped faces
      • why?
        • we tend to compare things with one another
        • tend to focus on things that are easily comparable
        • tend to avoid complex comparisons
      •  
        • A vs B
          • ?
        • A vs (A-) vs B
          • A
      • soooo...
        • looking to attract
          potential dating partners?
          • go along a friend that looks
            quite like you but is slightly
            less attractive (you-)
    • relativity: source of
      jealousy and envy
      • law making executive
        salaries public (1993)
        • openness intended
          to bring them down
        • media compared salaries
        • salaries skyrocketed
          (369 higher than in 1993)

      • Unknown CEO: If everyone knew everyone else's salaries,
        all but the highest paid individuals would feel underapid
        and would go out and looked for another job

        • -Xv: what about Semler?
      • a man's satisfaction with his salary
        depends on whether he makes
        more than his wife's sister's husband
        • getting-married advice
          • look for someone whose
            sibling is married to a
            productivity-challenged individual
        • H. L. Mencken
      • the more we have, the more we want!

  • 2. The Fallacy Of Supply and Demand
    Why the Price of Pearls - and Everything Else -
    Is Up In The Air

    • black pearls
      • Tom had discovered a great law of human action,
        namely, that in order to make a man covet a thing,
        it is only necessary to make the thing difficult to attain
        • Mark Twain
    • anchoring
      • like imprinting for gosling
        • Konrad Lorenz
      • first idea we get,
        accepted as
        the true one
        • first big-moving-thing as my mother
        • a price
          • #experiment:
            setting prices based on the
            last 2 digits of the SS number
      • arbitrary
        coherence
        • prices only become
          anchors when
          we consider a purchase
        • #experiment:
          Dan Arieley
          reading poetry
          • anchored
            as worth
            • paying for
            • getting paid for
        • breaking anchoring by
          changing the experience
          • Starbucks
    • herding
      • such a line to get in! this place must be good
      • self-herding
        • you getting in line
          after your past decisions
          • I've been eating here for a week,
            so this place must be good
        • past decisions
          • may be arbitrary
          • go unexamined
          • and shape our future!
        • question your
          repeated behaviour!
          • the unexamined life
            is not worth living
            • Socrates
    • economics
      • standard framework
        • supply and demand
          are independent
          • willingness to pay
            for the perceived utility
      • but price can be manipulated by the supply side!
      • policies should take into account our lack of the presumed rationality
  • $Id: predictably_irrational.mm 20 2010-10-08 21:46:27Z xverges@gmail.com $
    • mindmap.py:title=Predictably Irrational - Dan Ariely (reading in progress)
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