Hi! How was your weekend? Did you do anything fun? Did you spend some time outdoors, enjoying the coming summer? We certainly did! Finally – finally – it really seems that there will be summer even here in Helsinki. At some point! 😀 During the weekend we still needed warm sweaters to be outside, but it was sunny and really warm at least in the sun, – and they say we’ll see temperatures up to +20! this week (for us it’s still unbelievable, though it’s already the end of May, can you imagine?!), – so I begin this week full of joyful hope 🙂
Now, as promised, about a book: I finished reading Dan Ariely’s “Predictably Irrational” last week. It was such an enjoyable – and useful! – read! I’d truly recommend it to anyone who has anything to do with sales or marketing; and anyone at all, actually. There were so many ideas that really seem kind of evident when you think about them and compare them to how people actually behave, but when looked at from the rational perspective – they’re completely insane 😀
The topic here is behavioral economics. I’m sure one of the reasons why I found it so interesting is the fact that I myself have graduated from the university with a psychology major. And so I may be a bit biased here 🙂 But my husband read this same book and found it very interesting as well, – and he’s definitely not a psychologist! Therefore I hope the things the both of us found interesting will be interesting to the wider circle of people as well…
…and what follows in this post is just an account of absolutely random bits and pieces of what I read and found both interesting and entertaining. It won’t be anything like a book review, – or a complete picture of what you can find in the book, – but I hope to give you some ideas and urge you to read it. It’s really worth the time!
Here it is:
- Have you ever noticed that usually, given the choice between three things, – two of which are somehow similar, while the third is different, – we will choose the better one of the two and completely disregard the third? As in: if we were choosing a date partner and were presented with three candidates, two of which are about the same hight, build and hair colour, but one of them with a slightly better complexion or more perfect features, – and the third candidate was completely different, – we would choose the more “perfect” one of the two similar, and not even think about the third! Why? Because we would not have anyone to compare him to! The same, apparently, works for buying houses or cars or home appliances, or basically choosing anything at all. We have to have similar alternatives to be able to choose. (Here you can find a great advise: if you’re looking for a partner, try going to bars and clubs and all other “potential hunting grounds” with a friend who looks a lot like you but is a bit… hmm, let’s say, not that attractive 🙂 You’ll increase your chances by a lot. Just don’t tell the friend why you’re inviting particularly him/her!)
- How do we define the “normal” price for any goods or services or anything in life, really? When we moved to Finland, the first apartment we rented was actually a bit “out of our league” price-wise but it was in a wonderful place and it was only for one year, so we took it. Last year, when we had to move, we were not looking for cheaper apartments in different places – as was our original plan – but instead the rent we were paying for that one year became our “anchor” in evaluating all new apartments – we didn’t want anything cheaper! And the price that seemed high at the start looked normal after that one year of paying it and we didn’t want to “downgrade”. Apparently, all people behave like that! Soo, from this: if you are considering to start your own business selling something that is still quite new to the market – don’t under-price your goods! because the first price the buyers will see will become the “anchor” for them for all future comparison 🙂
- Probably the most interesting thing for me was the comparison between social norms and market norms. Apparently, we are very happy to help people just out of friendship, and its ok if we are rewarded with some small gift of gratitude for our help in, lat’s say, moving a sofa. But if we are offered money… that’s it, all thoughts of friendship are gone and we start evaluating our efforts in monetary terms. And that is mostly permanent! The next time the same person asks us for help, we automatically start thinking how much we should get paid! Here, probably, you really don’t need me to spell the implications, right?
- You know why your kids are the smartest, your house – the most beautiful, and your ideas – the best? Because you own them! Because they are yours 🙂 Apparently, whenever something starts belonging to us (even if that “belonging” comes from imagining yourself as an owner of, let’s say, some particular car), that same thing instantly gets “better” in our eyes than the exact same thing when it belongs to someone else 🙂 We are soooo biased, that it’s scary sometimes!
- And one more thing – our expectations shape our experience! It should be the other way around – our actual experience should shape our opinions about the things we experience, but experiments show that actually what we think about something and what we expect usually determines our experience. So let’s all be optimistic and expect only great things from the world around us, ok? 🙂 (If you’re interested in the role of expectations, you might also find Tali Sharot’s talk at a TED conference about the optimism bias interesting. I know I did :)).
Of course, there are many many more thing in the book , that were extremely interesting but I cannot recount everything here (and probably now you already know why I said this post is only about bits and pieces… it looks incomplete even to me, but I really don’t intend to rewrite chapters of the book here 🙂 ). And, by the way, everything is based on real experiments, not just some outsider observations! The book itself is written very lightly, it’s really fun to read.; and it provides great insights into most human thought and decision-making processes. So I really highly recommend it!
And returning to the topic of this post: there’s Dan Ariely’s blog and lots of cool things in it. I took a test to evaluate my irrationality here – and even after reading the book I was only “human” (therefore, far from rational) in all of my decisions and evaluations! Imagine that! 😀 There are also cool apps for iPhone, like Oranges2Apples – this one presents you with all the alternatives you could get for, let’s say, those 60 bucks you’re planning to spend on a new sweatshirt. Do you really really want this thing, huh? (should be a great tool for all the shopaholics 😀 ) – or At a Boy!, where you just get compliments 🙂 Just like that – for being alive 😀 (I’d definitely get this… Please make it for Android as well!!! )
So, if you’re interested – check the link, read the book and let’s hope we’ll be more rational in making really important decisions and take greater pleasure from letting ourselves be irrational in all the small everyday details. We are all human, after all! 🙂
Have a great day!