I recently finished the book “Predictably Irrational“. I’ve given up the phrase “it was a good read”… too highbrow for my tastes… so I’ll just say it was very good. The basic premise is that human behavior can be very irrational… but predictably so (yeah… I know… that’s the title.)
Here’s one example of our irrational behavior… if you could save $7 by driving 15 minutes out of your way for a $25 dollar pen would you? Most would say yes. But if you could save $7 by driving 15 minutes out of your way for a $455 dollar suit would you? Most would say nope… not worth it… But the reality is it’s the same $7 and 15 minutes…
If you like Malcolm Gladwell you will love this book. Below are a few thoughts from each chapter. If any one of them strikes your fancy buy the book… you’ll love it.
You should also pay particular attention to the first decision in a long stream of decisions. It may seem like it is just one decision, but that first decision may have impact on future decisions for years to come.
Zero/free is a source of irrational excitement. This is called the “zero price effect.”
If corporations started thinking in terms of social norms, they would realize that these norms build loyalty and–more important–make people want to extend themselves to the degree that corporations need today: to be flexible, concerned, and willing to pitch in. That’s what a social relationship delivers. A salary alone will not motivate people to risk their lives. Police officers, firefighters, soldiers–they don’t die for their weekly pay. It’s the social norms–pride in their profession and a sense of duty–that will motivate them to give up their lives and health. Money, as it turns out, is very often the most expensive way to motivate people. Social norms are not only cheaper, but often more effective as well.
We have problems with self-control, related to immediate and delayed gratification. But each of these problems has potential self-control mechanisms. If we can’t save from our paycheck, we can take advantage of our employer’s automatic deduction option; if we don’t have the will to exercise regularly alone, we can make an appointment to exercise in the company of our friends. These are tools that we can commit to in advance, and they may help us be the kind of people we want to be.”
The “endowment effect” means that when we own something, we begin to value it more than other people do.
In 210 BC, Xiang Yu led an army against the Ch’in Dynasty. While his troops slept, he burned his ships and smashed all the cooking pots. He explained to his troops that they had to either fight their way to victory or die. His troops won 9 consecutive battles. Eliminating options improved the focus of his troops. We feel compelled to preserve options, even at great expense, even when it doesn’t make sense.
When we believe something will be good, it generally will be good, and when we think it will be bad, it will be bad. But does finding out the truth after the experience change one’s mind? Nope…
We care about honesty and want to be honest. The problem is that our internal honesty monitor is active only when we contemplate big transgressions, like grabbing an entire box of pens. For little transgressions like taking a single pen, we don’t even consider how these actions would reflect on our honesty.
For a complete book summary see this link… Or better yet read the full book!