by Dan Ariely
A second main lesson is that although irrationality is commonplace, it does not necessarily mean that we are helpless. Once we understand when and where we may make erroneous decisions, we can try to be more vigilant, force ourselves to think differently about these decisions, or use technology to overcome our inherent shortcomings. This is also where businesses and policy makers could revise their thinking and consider how to design their policies and products so as to provide free lunches.
THANK YOU FOR reading this book. I hope you have gained some interesting insights about human behavior, gained some insight into what really makes us tick, and discovered ways to improve your decision making. I also hope that I have been able to share with you my enthusiasm for the study of rationality and irrationality. In my opinion, studying human behavior is a fantastic gift because it helps us better understand ourselves and the daily mysteries we encounter. Although the topic is important and fascinating, it is not easy to study, and there is still a lot of work ahead of us. As the Nobel laureate Murray Gell-Mann once said, “Think how hard physics would be if particles could think.”
Irrationally yours,
Dan Ariely
PS: If you want to participate in this journey, log on to www.predictablyirrational.com, sign up for a few of our studies, and leave us your ideas and thoughts.
Thanks
Over the years I have been fortunate to work on joint
research projects with smart, creative, generous individuals. The research described in this book is largely an outcome of their ingenuity and insight. These individuals are not only great researchers, but also close friends. They made this research possible. Any mistakes and omissions in this book are mine. (Short biographies of these wonderful researchers follow.) In addition to those with whom I have collaborated, I also want to thank my psychology and economics colleagues at large. Each idea I ever had, and every paper I ever wrote, was influenced either explicitly or implicitly by their writing, ideas, and creativity. Science advances mainly through a series of small steps based on past research, and I am fortunate to be able to take my own small steps forward from the foundation laid down by these remarkable researchers. At the end of this book, I have included some references for other academic papers related to each of the chapters. These should give the avid reader an enhanced perspective on, and the background and scope of, each topic. (But of course this isn’t a complete list.)
Much of the research described in this book was carried out while I was at MIT, and many of the participants and research assistants were MIT students. The results of the experiments highlight their (as well as our own) irrationalities, and sometimes poke fun at them, but this should not be confused with a lack of caring or a lack of admiration. These students are extraordinary in their motivation, love of learning, curiosity, and generous spirit. It has been a privilege to get to know you all—you even made Boston’s winters worthwhile!
Figuring out how to write in “non-academese” was not easy, but I got a lot of help along the way. My deepest thanks to Jim Levine, Lindsay Edgecombe, Elizabeth Fisher, and the incredible team at the Levine Greenberg Literary Agency. I am also indebted to Sandy Blakeslee for her insightful advice; and to Jim Bettman, Rebecca Waber, Ania Jakubek, Erin Allingham, Carlie Burck, Bronwyn Fryer, Devra Nelson, Janelle Stanley, Michal Strahilevitz, Ellen Hoffman, and Megan Hogerty for their role in helping me translate some of these ideas into words. Special thanks to my writing partner, Erik Calonius, who contributed greatly to these pages, with many real-world examples and a narrative style that helped me tell this story as well as it could be told. Special thanks also go to my trusting, supporting, and helpful editor at HarperCollins, Claire Wachtel.
I wrote the book while visiting the Institute for Advanced Study at Princeton. I cannot imagine a more ideal environment in which to think and write. I even got to spend some time in the institute’s kitchen, learning to chop, bake, sauté, and cook under the supervision of chefs Michel Reymond and Yann Blanchet—I couldn’t have asked for a better place to expand my horizons.
Finally, thanks to my lovely wife, Sumi, who has listened to my research stories over and over and over and over. And while I hope you agree that they are somewhat amusing for the first few reads, her patience and willingness to repeatedly lend me her ear merits sainthood. Sumi, tonight I will be home at seven-fifteen at the latest; make it eight o’clock, maybe eight-thirty; I promise.
List of Collaborators
On Amir
On joined MIT as a PhD student a year after me and became “my” first student. As my first student, On had a tremendous role in shaping what I expect from students and how I see the professor-student relationship. In addition to being exceptionally smart, On has an amazing set of skills, and what he does not know he is able to learn within a day or two. It is always exciting to work and spend time with him. On is currently a professor at the University of California at San Diego.
Marco Bertini
When I first met Marco, he was a PhD student at Harvard Business School, and unlike his fellow students he did not see the Charles River as an obstacle he should not cross. Marco is Italian, with a temperament and sense of style to match—an overall great guy you just want to go out for a drink with. Marco is currently a professor at London Business School.
Ziv Carmon
Ziv was one of the main reasons I joined Duke’s PhD program, and the years we spent together at Duke justified this decision. Not only did I learn from him a great deal about decision making and how to conduct research; he also became one of my dear friends, and the advice I got from him over the years has repeatedly proved to be invaluable. Ziv is currently a professor at INSEAD’s Singapore campus.
Shane Frederick
I met Shane while I was a student at Duke and he was a student at Carnegie Mellon. We had a long discussion about fish over sushi, and this has imprinted on me a lasting love for both. A few years later Shane and I both moved to MIT and had many more opportunities for sushi and lengthy discussions, including the central question of life: “If a bat and a ball cost $1.10 in total, and the bat costs a dollar more than the ball, how much does the ball cost?” Shane is currently a professor at MIT.
Ayelet Gneezy
I met Ayelet many years ago at a picnic organized by mutual friends. I had a very positive first impression of her, and my appreciation of her only increased with time. Ayelet is a wonderful person and a great friend, so it is a bit odd that the topics we decided to work on together were mistrust and revenge. Whatever drove us to start exploring these topics initially, it ended up being very useful both academically and personally. Ayelet is currently a professor at the University of California at San Diego (and if you happen to see another Gneezy on my list of collaborators, that is not because it is a popular last name).
Uri Gneezy
Uri is one of the most sarcastic and creative people I have ever met, and both of these skills make him able to effortlessly and rapidly turn out important and useful research. A few years ago, I took Uri to Burning Man, and while we were there, he completely blended into the atmosphere. On the way back, he lost some bet to me, and as a consequence, he was supposed to give a gift to a random person every day for a month—but sadly, once back in civilization, he was unable to do this. Uri is currently a professor at the University of California at San Diego.
Ernan Haruvy
Ernan and I got to spend some time together when he was at Harvard Business School and I was on the other side of the river. Ernan was one of the first people to think carefully about how the Internet can change the anonymity of human interactions and, as a consequence, the way we treat one another. He is smart and hardworking, and has an amazing willingness to help. Ernan is currently a professor at the University of Texas at Dallas.
James Heyman
James and I spent a year together at Berkeley. He would often come in to discuss some idea, bringing with him some of his recent baking outputs, and this was always a good start for an interes
ting discussion. Following his life’s maxim that money isn’t everything, his research focuses on nonfinancial aspects of marketplace transactions. One of James’s passions is the many ways behavioral economics could play out in policy decisions, and over the years I have come to see the wisdom in this approach. James is currently a professor at the University of St. Thomas (in Minnesota, not the Virgin Islands).
Günter Hitsch
Günter is funny, smart, and charming—and not just relative to other economists. He is the sort of guy that you want to have a beer with, and talking with him is always an interesting yet somewhat unexpected experience. Günter is also one of the most meticulous econometricians I know, and he can spend years (I am not joking) running very complex computer models to properly estimate some obscure parameters. Günter is currently a professor at the University of Chicago.
Ali Hortaçsu
Ali is one of the most well-balanced individuals I have ever met. Nothing seems to faze him, and he is always oozing goodness (well, this is not completely true—he does seem to become a different person when the Turkish soccer team is playing). Ali was one of the first economists to take a careful look at online auctions, helping us understand how people actually behave in such auctions. Working with him on online dating has been a very educational experience for me. Ali is currently a professor at the University of Chicago.
Leonard Lee
Leonard joined the PhD program at MIT to work on topics related to e-commerce. Since we both kept long hours, we started taking breaks together late at night, and this gave us a chance to start working jointly on a few research projects. The collaboration with Leonard has been great. He has endless energy and enthusiasm, and the number of experiments he can carry out during an average week is about what other people do in a semester. In addition, he is one of the nicest people I have ever met and always a delight to chat and work with. Leonard is currently a professor at Columbia University.
Jonathan Levav
Jonathan loves his mother like no one else I have met, and his main regret in life is that he disappointed her when he didn’t go to medical school. Jonathan is smart, funny, and an incredibly social animal, able to make new friends in fractions of seconds. He is physically big with a large head, large teeth, and an even larger heart. Jonathan is currently a professor at Columbia University.
George Loewenstein
George is one of my first, favorite, and longest-time collaborators. He is also my role model. In my mind George is the most creative and broadest researcher in behavioral economics. George has an incredible ability to observe the world around him and find nuances of behavior that are important for our understanding of human nature as well as for policy. George is currently, and appropriately, the Herbert A. Simon Professor of Economics and Psychology at Carnegie Mellon University.
Nina Mazar
Nina first came to MIT for a few days to get feedback on her research and ended up staying for five years. During this time we had oodles of fun working together and I came to greatly rely on her. Nina is oblivious of obstacles, and her willingness to take on large challenges led us to carry out some particularly difficult experiments in rural India. For many years I hoped that she would never decide to leave; but, alas, at some point the time came: she is currently a professor at the University of Toronto. In an alternative reality, Nina is a high-fashion designer in Milan, Italy.
Elie Ofek
Elie is an electrical engineer by training who then saw the light (or so he believes) and switched to marketing. Not surprisingly, his main area of research and teaching is innovations and high-tech industries. Elie is a great guy to have coffee with because he has interesting insights and perspectives on every topic. Currently, Elie is a professor at Harvard Business School (or as its members call it, “The Haaarvard Business School”).
Yesim Orhun
Yesim is a true delight in every way. She is funny, smart, and sarcastic. Regrettably, we had only one year to hang out while we were both at Berkeley. Yesim’s research takes findings from behavioral economics and, using this starting point, provides prescriptions for firms and policy makers. For some odd reason, what really gets her going is any research question that includes the words simultaneity and endogeneity. Yesim is currently a professor at the University of Chicago.
Drazen Prelec
Drazen is one of the smartest people I have ever met and one of the main reasons I joined MIT. I think of Drazen as academic royalty: he knows what he is doing, he is sure of himself, and everything he touches turns to gold. I was hoping that by osmosis, I would get some of his style and depth, but having my office next to his was not sufficient for this. Drazen is currently a professor at MIT.
Kristina Shampanier
Kristina came to MIT to be trained as an economist, and for some odd but wonderful reason elected to work with me. Kristina is exceptionally smart, and I learned a lot from her over the years. As a tribute to her wisdom, when she graduated from MIT, she opted for a nonacademic job: she is now a high-powered consultant in Boston.
Jiwoong Shin
Jiwoong is a yin and yang researcher. On one hand he carries out research in standard economics assuming that individuals are perfectly rational; on the other hand he carries out research in behavioral economics showing that people are irrational. He is thoughtful and reflective—a philosophical type—and this duality does not faze him. Jiwoong and I started working together mostly because we wanted to have fun together, and indeed we have spent many exciting hours working together. Jiwoong is currently a professor at Yale University.
Baba Shiv
Baba and I first met when we were both PhD students at Duke. Over the years Baba has carried out fascinating research in many areas of decision making, particularly on how emotions influence decision making. He is terrific in every way and the kind of person who makes everything around him seem magically better. Baba is currently a professor at Stanford University.
Stephen Spiller
Stephen started his academic career as a student of John Lynch. John was my Ph.D. adviser as well, so in essence, Stephen and I are academic brothers, and I feel as though he is my little (but much taller) brother. Stephen is smart and creative, and it has been a privilege to watch him advance on his academic adventures. Stephen is currently a doctoral student at Duke University, and if his advisers had any say in the matter, we would try to never let him graduate.
Rebecca Waber
Rebecca is one of the most energetic and happiest people I have ever met. She is also the only person I ever observed to burst out laughing while reading her marriage vows. Rebecca is particularly interested in research on decision making applied to medical decisions, and I count myself as very lucky that she chose to work with me on these topics. Rebecca is currently a graduate student at the Media Laboratory at MIT.
Klaus Wertenbroch
Klaus and I met when he was a professor at Duke and I was a PhD student. Klaus’s interest in decision making is mostly based on his attempts to make sense of his own deviation from rationality, whether it is his smoking habit or his procrastination in delaying work for the pleasure of watching soccer on television. It was only fitting that we worked together on procrastination. Klaus is currently a professor at INSEAD.
Notes
1. Jodi Kantor, “Entrees Reach $40,” New York Times (October 21, 2006).
2. Itamar Simonson, “Get Closer to Your Customers by Understanding How They Make Choices,” California Management Review (1993).
3. Louis Uchitelle, “Lure of Great Wealth Affects Career Choices,” New York Times (November 27, 2006).
4. Katie Hafner, “In the Web World, Rich Now Envy the Superrich,” New York Times (November 21, 2006).
5. www.filenesbasement.com/bridal.php
6. Valerie Ulene, “Car Keys? Not So Fast,” Los Angeles Times (January 8, 2007).
7. John Leland, “Debtors Search for Discipline through Blogs,” New York Times (February 18, 2007).
8. “Em
ail Has Made Slaves of Us,” Australian Daily Telegraph (June 16, 2008).
9. “Studies Find Big Benefits in Marriage,” New York Times (April 10, 1995).
10. Ralph Keeney, “Personal Decisions Are the Leading Cause of Death,” Operation Research (2008).
11. “Pearls Before Breakfast,” Washington Post (April 8, 2007).
12. Colin Schieman, “The History of Placebo Surgery,” University of Calgary (March 2001).
13. Margaret Talbot, “The Placebo Prescription,” New York Times (June 9, 2000).
14. Sarah Bakewell, “Cooking with Mummy,” Fortean Times (July 1999).
15. D. J. Swank, S. C. G Swank-Bordewijk, W. C. J. Hop, et al., “Laparoscopic Adhesiolysis in Patients with Chronic Abdominal Pain: A Blinded Randomised Controlled Multi-Center Trial,” Lancet (April 12, 2003).
16. “Off-Label Use of Prescription Drugs Should Be Regulated by the FDA,” Harvard Law School, Legal Electronic Archive (December 11, 2006).
17. Irving Kirsch, “Antidepressants Proven to Work Only Slightly Better Than Placebo,” Prevention and Treatment (June 1998).
18. Sheryl Stolberg, “Sham Surgery Returns as a Research Tool,” New York Times (April 25, 1999).
19. Margaret E. O’Kane, National Committee for Quality Assurance, letter to the editor, USA Today (December 11, 2006).
20. Greil Marcus, “One Step Back: Where Are the Elixirs of Yesteryear When We Hurt?” New York Times, January 26, 1998.
