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Executive Times |
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2008 Book Reviews |
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Predictably
Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely |
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Rating: |
*** |
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(Recommended) |
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Click
on title or picture to buy from amazon.com |
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Experiments On
the off chance that you’ve not yet concluded that humans are not
fundamentally rational, be sure to read Dan Ariely’s new book, Predictably
Irrational: The Hidden Forces That Shape Our Decisions. Ariely is a
behavioral economist at MIT and thanks to the experiments he describes in
this book, he offers insights that are both surprising and illuminating for
readers. Here’s an excerpt, from the beginning of Chapter 9, “The Effect of
Expectations: Why the Mind Gets What
It Expects,” pp. 155-157: Suppose you're a fan of the
Philadelphia Eagles and you're watching a football game with a friend who,
sadly, grew up in New York City and is a rabid fan of the Giants. You don't
really understand why you ever became friends, but after spending a semester
in the same dorm room you start liking him, even though you think he's
football-challenged. The Eagles have possession and
are down by five points with no time-outs left. It's the fourth quarter, and
six seconds are left on the clock. The ball is on the 12-yard line. Four wide
receivers line up for the final play. The quarterback hikes the ball and
drops back in the pocket. As the receivers sprint toward the end zone, the
quarterback throws a high pass just as the time runs out. An Eagles wide
receiver near the corner of the end zone dives for the ball and makes a
spectacular catch. The
referee signals a touchdown and all the Eagles players run onto the field in
celebration. But wait. Did the receiver get both of his feet in? It looks
close on the Jumbotron; so the booth calls down for a review. You turn to
your friend: "Look at that! What a great catch! He was totally in. Why
are they even reviewing it?" Your friend scowls. "That was
completely out! I can't believe the ref didn't see it! You must be crazy to
think that was in!" What just happened? Was your
friend the Giants fan just experiencing wishful thinking? Was he deceiving
himself? Worse, was he lying? Or had his loyalty to his team—and his
anticipation of its win—completely, truly, and deeply clouded his judgment? I was thinking about that one
evening, as I strolled through Cambridge and over to MIT's Walker Memorial
Building. How could two friends—two honest guys—see one soaring pass in two
different ways? In fact, how could any two parties look at precisely the
same event and interpret it as supporting their opposing points of view? How
could Democrats and Republicans look at a single schoolchild who is unable to
read, and take such bitterly different positions on the same issue? How could
a couple embroiled in a fight see the causes of their argument so
differently? A friend of mine who had spent
time in Belfast, Ireland, as a foreign correspondent, once described a
meeting he had arranged with members of the IRA. During the interview, news
came that the governor of the Maze prison, a winding row of cell blocks that
held many IRA operatives, had been assassinated. The IRA members standing
around my friend, quite understandably, received the news with
satisfaction—as a victory or their cause. The British, of course, didn't see
it in those terms it all. The headlines in London the next day boiled with
anger and calls for retribution. In fact, the British saw the event as proof
that discussions with the IRA would lead nowhere and that the IRA should be
crushed. I am an Israeli, and no stranger to such cycles of violence.
Violence is not rare. It happens so frequently that we rarely stop to ask
ourselves why. Why does it happen? Is it an outcome of history, or race, or
politics or is there something fundamentally irrational in us that encourages
conflict, that causes us to look at the same event and, depending on our
point of view, see it in totally different terms? Leonard
Lee (a professor at Columbia), Shane Frederick (a professor at MIT), and I
didn't have any answers to these profound questions. But in a search for the
root of this human condition, we decided to set up a series of simple experiments
to explore how previously held impressions can cloud our point of view. We
came up with a simple test one in which we would not use religion, politics,
or even sports as the indicator. We would use glasses of beer. Predictably
Irrational is a pleasure to read, in a writing style that’s engaging, as
shown in the excerpt. The experiments noted at the end of excerpt point
toward the basis on which Ariely has drawn his conclusions. I have a bias
toward the reliance on data, and many of the experiments he’s conducted seem
to provide ample facts on which to draw these conclusions. The next time you
ponder an economist’s projection that’s based on expectations of rational behavior,
think about Ariely’s perspective about irrational behavior, and how that can
be predicted. Steve
Hopkins, May 15, 2008 |
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The recommendation rating for
this book appeared in the June 2008 issue of Executive Times URL for this review: http://www.hopkinsandcompany.com/Books/Predictably Irrational.htm For Reprint Permission, Contact: Hopkins & Company, LLC • E-mail: books@hopkinsandcompany.com |
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