Wednesday, October 1, 2014

Predictably Irrational

The human mind is a fascinating thing. Though I like to think I have a pretty good understanding of how most people think (or, at least, how people react to certain stimuli), I love expanding that knowledge whenever possible. In particular, I love hearing about experiments in behavioral psychology: the methods, the results, the conclusions we can draw; the whole shebang.

So, when I started listening to an audio book of Predictably Irrational on my journey to and from Seattle a month ago, I was in for a real treat. In short, the book was all that and more.

The book was recommended to me by my boss Reid, who insisted that I listen to the book as soon as possible. Naturally, I got around to it about two years later, the file for the book sitting teasingly on my desktop. I actually tried to listen to it a couple of times, each time forgetting that the file actually has a sort of DRM protection on it. I couldn't actually listen to it unless I got a copy myself.

Finally, a month or so ago, I started a free trial of Audible (the audio book service you never stop hearing about on every major podcast) and chose Predictably Irrational as my free book. For whatever reason, it never occurred to me until then that audiobooks might make a decent substitute for podcasts on a long trip.

The first thing you might notice upon listening to the book is that it's narrated by Simon Jones. That is, you might notice it if you listened to the original radio recording of The Hitchhiker's Guide to the Galaxy. He spoke so well that at first I mistook him for Peter Jones, the voice of The Guide in the radio series, but in fact it was Simon Jones, the voice of Arthur Dent. Either way, though, his voice is fantastic, and made the audio book very easy listening.

More importantly, though, the content of the book kept me engaged for hours on end. In short, each of the book's 15 chapters address an instance of human irrationality, from the power of "free" things to the complex relationships defined by social and market norms. In each chapter the author, MIT professor of behavioral economics Dan Ariely, details experiments that he and other behavioral economists and psychologists performed to show that, contrary to what standard economics suggest, people not only irrational, but reliably and predictably so.

The chapters mostly follow a basic formula. First, the book paints a mental picture of a situation in which the chapter's subject might come into play. He discusses what the rational response to a situation might be, then discusses irrational responses, raising the question of what people actually do in that situation.

Then, Ariely detail an experiment they conducted to test a similar situation. He explains how the experiment was set up, the subjects involved, and exactly what the experiment was supposed to measure.

Finally, he discusses the results of the experiment and what meanings we can take away from it.

For example, one of my favorite chapters included a few experiments I might like to recreate some day. In an effort to see how the concept of "free" things affects a person's decision-making power, they created a booth at a convention that was offering chocolate. The "subjects" lined up at the booth and, one by one, they were offered two chocolates. They could only choose one.

One of the chocolates was a standard Hershey's Kiss. These things are cheap, and their quality reflects that fact.

The other chocolate was much higher quality: a special brand of truffle that usually costs $0.60-0.70 each. I don't recall the brand right now, but suffice to say it was clearly superior to the Kiss.

The subjects had the option to either buy a Kiss for 1 cent or to buy the truffle for 16 cents. The experimenters recorded the results, and in the end the truffle won out by a large margin. After all, 16 cents was a steal for that kind of chocolate.

Later, though, they changed the prices. The reduced the price of each chocolate by 1 cent, making the Kiss free and the truffle 15 cents. Logically, the truffle still cost 15 cents more than the Kiss. However, suddenly the roles reversed, and the Kiss won out by a large margin.

Another experiment in the same vein focused on kids on Halloween, which was a much more telling experiment than the one I performed on children last year. In this one, each kid was first handed three Hershey's Kisses--again, basically the bottom of the barrel in terms of chocolate.

The children could keep the Kisses if they liked. Or, if they were willing to trade, the experimenters could give the kids either a 4oz Snickers bar in exchange for one Kiss or an 8oz Snickers bar in exchange for two Kisses. The kids recognized the deal and almost always traded the two Kisses for the 8oz candy bar.

Again, though, they changed the experiment later on. Now, instead, the kids could either keep the Kisses and get the 4oz candy bar for free or they could get the 8oz candy bar in exchange for just one of the Kisses. Again, everything changed: the kids were unwilling to give up a Kiss to double the size of the bar. Even though the value of the exchange hadn't changed--a Kiss was still worth 4ozs of candy bar--the fact that they could get something for free made them averse to any cost.

These experiments were fascinating on their own, but Ariely always went on to put that information to practical use. I'd detail those notes here, but I'm afraid I'd be getting close to plagiarism.

Suffice to say that it was an exciting book to listen to, and next time I'm in a book store I think I'll pick up a copy of the print version so I can reference it easily in the future.

1 comment:

  1. Sounds like a great read! I'll have to pick it up.

    If you're interested in psychology generally, I recommend The Righteous Mind by Jonathan Haidt. It focuses on how people make moral decisions.