Predictably Irrational
Page 30
21. Crisis Management: Mastering the Skills to Prevent Disasters (Harvard Business Essentials), Harvard Business Press (2004), and “Tylenol made a hero of Johnson & Johnson: The recall that started them all,” New York Times, March 23, 2002, by Judith Rehak.
22. Federal Bureau of Investigation, Crime in the United States 2004—Uniform Crime Reports (Washington, D.C.: U.S. Government Printing Office, 2005).
23. Brody Mullins, “No Free Lunch: New Ethics Rules Vex Capitol Hill,” Wall Street Journal (January 29, 2007).
24. “Pessimism for the Future,” California Bar Journal (November 1994).
25. Maryland Judicial Task Force on Professionalism (November 10, 2003): http://www.courts.state.md.us/publications/professionalism2003.pdf.
26. Florida Bar/Josephson Institute Study (1993).
27. DPA Correlator, Vol. 9, No. 3 (September 9, 2002). See also Steve Sonnenberg, “The Decline in Professionalism—A Threat to the Future of the American Association of Petroleum Geologists,” Explorer (May 2004).
28. Jan Crosthwaite, “Moral Expertise: A Problem in the Professional Ethics of Professional Ethicists,” Bioethics, Vol. 9 (1995): 361–379.
29. The 2002 Transparency International Corruption Perceptions Index, transparency.org.
30. McKinsey and Company, “Payments: Charting a Course to Profits” (December 2005).
Bibliography and Additional Readings
Below is a list of the papers on which the chapters were based, plus suggestions for additional readings on each topic.
Introduction
RELATED READINGS
Daniel Kahneman, Barbara L. Fredrickson, Charles A. Schreiber, and Donald A. Redelmeier, “When More Pain Is Preferred to Less: Adding a Better End,” Psychological Science (1993).
Donald A. Redelmeier and Daniel Kahneman, “Patient’s Memories of Painful Medical Treatments—Real-Time and Retrospective Evaluations of Two Minimally Invasive Procedures,” Pain (1996).
Dan Ariely, “Combining Experiences over Time: The Effects of Duration, Intensity Changes, and On-Line Measurements on Retrospective Pain Evaluations,” Journal of Behavioral Decision Making (1998).
Dan Ariely and Ziv Carmon, “Gestalt Characteristics of Experienced Profiles,” Journal of Behavioral Decision Making (2000).
Chapter 1: The Truth about Relativity
RELATED READINGS
Amos Tversky, “Features of Similarity,” Psychological Review, Vol. 84 (1977).
Amos Tversky and Daniel Kahneman, “The Framing of Decisions and the Psychology of Choice,” Science (1981).
Joel Huber, John Payne, and Chris Puto, “Adding Asymmetrically Dominated Alternatives: Violations of Regularity and the Similarity Hypothesis,” Journal of Consumer Research (1982).
Itamar Simonson, “Choice Based on Reasons: The Case of Attraction and Compromise Effects,” Journal of Consumer Research (1989).
Amos Tversky and Itamar Simonson, “Context-Dependent Preferences,” Management Science (1993).
Dan Ariely and Tom Wallsten, “Seeking Subjective Dominance in Multidimensional Space: An Explanation of the Asymmetric Dominance Effect,” Organizational Behavior and Human Decision Processes (1995).
Constantine Sedikides, Dan Ariely, and Nils Olsen, “Contextual and Procedural Determinants of Partner Selection: On Asymmetric Dominance and Prominence,” Social Cognition (1999).
Chapter 2: The Fallacy of Supply and Demand
BASED ON
Dan Ariely, George Loewenstein, and Drazen Prelec, “Coherent Arbitrariness: Stable Demand Curves without Stable Preferences,” Quarterly Journal of Economics (2003).
Dan Ariely, George Loewenstein, and Drazen Prelec, “Tom Sawyer and the Construction of Value,” Journal of Economic Behavior and Organization (2006).
RELATED READINGS
Cass R. Sunstein, Daniel Kahneman, David Schkade, and Ilana Ritov, “Predictably Incoherent Judgments,” Stanford Law Review (2002).
Uri Simonsohn, “New Yorkers Commute More Everywhere: Contrast Effects in the Field,” Review of Economics and Statistics (2006).
Uri Simonsohn and George Loewenstein, “Mistake #37: The Impact of Previously Faced Prices on Housing Demand,” Economic Journal (2006).
Chapter 3: The Cost of Zero Cost
BASED ON
Kristina Shampanier, Nina Mazar, and Dan Ariely, “How Small Is Zero Price? The True Value of Free Products,” Marketing Science (2007).
RELATED READINGS
Daniel Kahneman and Amos Tversky, “Prospect Theory: An Analysis of Decision under Risk,” Econometrica (1979).
Eldar Shafir, Itamar Simonson, and Amos Tversky, “Reason-Based Choice,” Cognition (1993).
Chapter 4: The Cost of Social Norms
BASED ON
Uri Gneezy and Aldo Rustichini, “A Fine Is a Price,” Journal of Legal Studies (2000).
James Heyman and Dan Ariely, “Effort for Payment: A Tale of Two Markets,” Psychological Science (2004).
Kathleen Vohs, Nicole Mead, and Miranda Goode, “The Psychological Consequences of Money,” Science (2006).
RELATED READINGS
Margaret S. Clark and Judson Mills, “Interpersonal Attraction in Exchange and Communal Relationships,” Journal of Personality and Social Psychology, Vol. 37 (1979), 12–24.
Margaret S. Clark, “Record Keeping in Two Types of Relationships,” Journal of Personality and Social Psychology, Vol. 47 (1984).
Alan Fiske, “The Four Elementary Forms of Sociality: Framework for a Unified Theory of Social Relations,” Psychological Review (1992).
Pankaj Aggarwal, “The Effects of Brand Relationship Norms on Consumer Attitudes and Behavior,” Journal of Consumer Research (2004).
Chapter 5: The Power of a Free Cookie
BASED ON
Dan Ariely, Uri Gneezy, and Ernan Haruvy, “On the Discontinuity of Demand Curves at Zero: Charging More and Selling More,” Working Paper, Duke University (2010).
RELATED READINGS
John Quah, “The Law of Demand and Risk Aversion,” Econometrica (2003).
Angus Deaton and John Muellbauer, Economics and Consumer Behavior, Cambridge University Press, Cambridge, UK (1980).
Martin Dufwenberg and Georg Kirchsteiger, “A Theory of Sequential Reciprocity,” Games and Economic Behavior (2004).
Armin Falk and Urs Fischbacher, “A Theory of Reciprocity,” Games and Economic Behavior (2006).
James Coleman, Foundations of Social Theory, Harvard University Press, Cambridge, MA (1990).
See also readings for Chapter 4.
Chapter 6: The Influence of Arousal
BASED ON
Dan Ariely and George Loewenstein, “The Heat of the Moment: The Effect of Sexual Arousal on Sexual Decision Making,” Journal of Behavioral Decision Making (2006).
RELATED READINGS
George Loewenstein, “Out of Control: Visceral Influences on Behavior,” Organizational Behavior and Human Decision Processes (1996).
Peter H. Ditto, David A. Pizarro, Eden B. Epstein, Jill A. Jacobson, and Tara K. McDonald, “Motivational Myopia: Visceral Influences on Risk Taking Behavior,” Journal of Behavioral Decision Making (2006).
Chapter 7: The Problem of Procrastination and Self-Control
BASED ON
Dan Ariely and Klaus Wertenbroch, “Procrastination, Deadlines, and Performance: Self-Control by Precommitment,” Psychological Science (2002).
RELATED READINGS
Ted O’Donoghue and Mathew Rabin, “Doing It Now or Later,” American Economic Review (1999).
Yaacov Trope and Ayelet Fishbach, “Counteractive Self-Control in Overcoming Temptation,” Journal of Personality and Social Psychology (2000).
Chapter 8: The High Price of Ownership
BASED ON
Ziv Carmon and Dan Ariely, “Focusing on the Forgone: How Value Can Appear So Different to Buyers and Sellers,” Journal of Consumer Research (2000).
James Heyman, Yesim Orhun, and Dan Ariely, “Auction Fever: The Effect of Opponents a
nd Quasi-Endowment on Product Valuations,” Journal of Interactive Marketing (2004).
RELATED READINGS
Richard Thaler, “Toward a Positive Theory of Consumer Choice,” Journal of Economic Behavior and Organization (1980).
Jack Knetsch, “The Endowment Effect and Evidence of Nonreversible Indifference Curves,” American Economic Review, Vol. 79 (1989), 1277–1284.
Daniel Kahneman, Jack Knetsch, and Richard Thaler, “Experimental Tests of the Endowment Effect and the Coase Theorem,” Journal of Political Economy (1990).
Daniel Kahneman, Jack Knetsch, and Richard H. Thaler, “Anomalies: The Endowment Effect, Loss Aversion, and
Status Quo Bias,” Journal of Economic Perspectives, Vol. 5 (1991), 193–206.
Chapter 9: Keeping Doors Open
BASED ON
Jiwoong Shin and Dan Ariely, “Keeping Doors Open: The Effect of Unavailability on Incentives to Keep Options Viable,” Management Science (2004).
RELATED READINGS
Sheena Iyengar and Mark Lepper, “When Choice Is Demotivating: Can One Desire Too Much of a Good Thing?” Journal of Personality and Social Psychology (2000).
Daniel Gilbert and Jane Ebert, “Decisions and Revisions: The Affective Forecasting of Changeable Outcomes,” Journal of Personality and Social Psychology (2002).
Ziv Carmon, Klaus Wertenbroch, and Marcel Zeelenberg, “Option Attachment: When Deliberating Makes Choosing Feel Like Losing,” Journal of Consumer Research (2003).
Chapter 10: The Effect of Expectations
BASED ON
John Bargh, Mark Chen, and Lara Burrows, “Automaticity of Social Behavior: Direct Effects of Trait Construct and Stereotype Activation on Action,” Journal of Personality and Social Psychology (1996).
Margaret Shih, Todd Pittinsky, and Nalini Ambady, “Stereotype Susceptibility: Identity Salience and Shifts in Quantitative Performance,” Psychological Science (1999).
Sam McClure, Jian Li, Damon Tomlin, Kim Cypert, Latané Montague, and Read Montague, “Neural Correlates of Behavioral Preference for Culturally Familiar Drinks,” Neuron (2004).
Leonard Lee, Shane Frederick, and Dan Ariely, “Try It, You’ll Like It: The Influence of Expectation, Consumption, and Revelation on Preferences for Beer,” Psychological Science (2006).
Marco Bertini, Elie Ofek, and Dan Ariely, “To Add or Not to Add? The Effects of Add-Ons on Product Evaluation,” Working Paper, HBS (2007).
RELATED READINGS
George Loewenstein, “Anticipation and the Valuation of Delayed Consumption,” Economic Journal (1987).
Greg Berns, Jonathan Chappelow, Milos Cekic, Cary Zink, Giuseppe Pagnoni, and Megan Martin-Skurski, “Neurobiological Substrates of Dread,” Science (2006).
Chapter 11: The Power of Price
BASED ON
Leonard Cobb, George Thomas, David Dillard, Alvin Merendino, and Robert Bruce, “An Evaluation of Internal Mammary Artery Ligation by a Double-Blind Technic,” New England Journal of Medicine (1959).
Bruce Moseley, Kimberly O’Malley, Nancy Petersen, Terri Menke, Baruch Brody, David Kuykendall, John Hollingsworth, Carol Ashton, and Nelda Wray, “A Controlled Trial of Arthroscopic Surgery for Osteoarthritis of the Knee,” New England Journal of Medicine (2002).
Baba Shiv, Ziv Carmon, and Dan Ariely, “Placebo Effects of Marketing Actions: Consumers May Get What They Pay For,” Journal of Marketing Research (2005).
Rebecca Waber, Baba Shiv, Ziv Carmon, and Dan Ariely, “Commercial Features of Placebo and Therapeutic Efficacy,” JAMA (2008).
RELATED READINGS
Tor Wager, James Rilling, Edward Smith, Alex Sokolik, Kenneth Casey, Richard Davidson, Stephen Kosslyn, Robert Rose, and Jonathan Cohen, “Placebo-Induced Changes in fMRI in the Anticipation and Experience of Pain,” Science (2004).
Alia Crum and Ellen Langer, “Mind-Set Matters: Exercise and the Placebo Effect,” Psychological Science (2007).
Chapter 12: The Cycle of Distrust
BASED ON
Ayelet Gneezy, Stephen Spiller, and Dan Ariely, “Trust in the Marketplace: A Fundamentlly Disbelieving State of Mind,” Working Paper, Duke University (2010).
Marian Friestad and Peter Wright, “The Persuasion Knowledge Model: How People Cope with Persuasion Attempts,” Journal of Consumer Research (1994).
William Forster Lloyd, “Two Lectures on the Checks to Population, Delivered Before the University of Oxford, in Michaelmas Term,” Oxford Press (1833).
Günter Hitsch, Ali Hortaçsu, and Dan Ariely, “Matching and Sorting in Online Dating,” American Economic Review (2010).
Günter Hitsch, Ali Hortaçsu, and Dan Ariely, “What Makes You Click?—Mate Preferences in Online Dating,” Working Paper, University of Chicago (2010).
RELATED READINGS
Garrett Hardin, “The Tragedy of the Commons,” Science (1968).
Peter Darke and Robin Ritchie, “The Defensive Consumer: Advertising Deception, Defensive Processing, and Distrust,” Journal of Marketing Research (2007).
Richard Emerson, “Social Exchange Theory,” Annual Review of Sociology (1976).
Ernst Fehr and Simon Gachter, “Fairness and Retaliation: The Economics of Reciprocity,” Journal of Economic Perspectives (2000).
Gita Johar, “Consumer Involvement and Deception from Implied Advertising Claims,” Journal of Marketing Research (1995).
Scott Koslow, “Can the Truth Hurt? How Honest and Persuasive Advertising can Unintentionally Lead to Increased Consumer Skepticism,” Journal of Consumer Affairs (2000).
Chapters 13 and 14:
The Context of Our Character, Parts I and II
BASED ON
Nina Mazar and Dan Ariely, “Dishonesty in Everyday Life and Its Policy Implications,” Journal of Public Policy and Marketing (2006).
Nina Mazar, On Amir, and Dan Ariely, “The Dishonesty of Honest People: A Theory of Self-Concept Maintenance,” Journal of Marketing Research (2008).
RELATED READINGS
Max Bazerman and George Loewenstein, “Taking the Bias out of Bean Counting,” Harvard Business Review (2001).
Max Bazerman, George Loewenstein, and Don Moore, “Why Good Accountants Do Bad Audits: The Real Problem Isn’t Conscious Corruption. It’s Unconscious Bias,” Harvard Business Review (2002).
Maurice Schweitzer and Chris Hsee, “Stretching the Truth: Elastic Justification and Motivated Communication of Uncertain Information,” Journal of Risk and Uncertainty (2002).
Chapter 15: Beer and Free Lunches
BASED ON
Dan Ariely and Jonathan Levav, “Sequential Choice in Group Settings: Taking the Road Less Traveled and Less Enjoyed,” Journal of Consumer Research (2000).
Richard Thaler and Shlomo Benartzi, “Save More Tomorrow: Using Behavioral Economics to Increase Employee Savings,” Journal of Political Economy (2004).
RELATED READINGS
Eric J. Johnson and Daniel Goldstein, “Do Defaults Save Lives?” Science, (2003).
About the Author
DAN ARIELY is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University, with appointments at the Fuqua School of Business, the Center for Cognitive Neuroscience, the Department of Economics, and the School of Medicine. He is also the founder of the Center for Advanced Hindsight. Dan earned one Ph.D. in cognitive psychology and another Ph.D. in business administration. Over the years he has won numerous scientific awards. Dan wrote this book while he was a fellow at the Institute for Advanced Study at Princeton. His work has been featured in leading scholarly journals in psychology, economics, neuroscience, medicine, and business, and in a variety of popular media outlets, including the New York Times, the Wall Street Journal, the Washington Post, The New Yorker, the Boston Globe, Scientific American, and Science. He has appeared on CNN and CNBC, and is a regular commentator on National Public Radio. He lives in Durham, North Carolina, with his wife and two children.
Visit www.AuthorTracker.com for exclusive information on your favorite HarperColl
ins authors.
Books by Dan Ariely
The Irrational Bundle
Predictably Irrational, The Upside of Irrationality, and The Honest Truth About Dishonesty
The Upside of Irrationality
The Unexpected Benefits of Defying Logic
The Honest Truth About Dishonesty
How We Lie to Everyone - Especially Ourselves
Predictably Irrational
The Hidden Forces That Shape Our Decisions
Irrationally Yours
On Missing Socks, Pick-up Lines, and Other Existential Puzzles
Praise for Predictably Irrational
“This is a wonderful, eye-opening book. Deep, readable, and providing refreshing evidence that there are domains and situations in which material incentives work in unexpected ways. We humans are humans, with qualities that can be destroyed by the introduction of economic gains. A must-read!”
—Nassim Nicholas Taleb,
New York Times bestselling author of
The Black Swan: The Impact of the Highly Improbable
“Surprisingly entertaining. . . . Ariely’s book makes economics and the strange happenings of the human mind fun.”
—USA Today
“A fascinating romp through the science of decision-making that unmasks the ways that emotions, social norms, expectations, and context lead us astray.”
—Time
“In creative ways, author Dan Ariely puts rationality to the test. . . . New experiments and optimistic ideas tumble out of him, like water from a fountain.”
—Boston Globe
“An entertaining tour of the many ways people act against their best interests, drawing on Ariely’s own ingeniously designed experiments. . . . Personal and accessible.”
—BusinessWeek
“Ariely’s book addresses some weighty issues . . . with an unexpected dash of humor.”
—Entertainment Weekly
“This sly and lucid book is not about your grandfather’s dismal science. . . . Ariely moves comfortably from the lab to broad social questions to his own life. . . . He is good-tempered company . . . and crystal clear about all he describes. But Predictably Irrational is a far more revolutionary book than its unthreatening manner lets on. It’s a concise summary of why today’s social science increasingly treats the markets-know-best model as a fairy tale.”