We’re all Predictably Irrational, so deal with it

I’ve recently read a couple of very famous books on behavioural science. Considering why we think and act the way we do greatly improves our ability to actually get stuff done right, both individually and as a team.

Here’s some thoughts on the first book, ‘Predictably Irrational’ by Dan Ariely. If you’d like more info, this Ted Talk is a good start.


Relative Value

Our decisions are easily influenced. We instinctively assign value to an item based on the alternate choices available, despite the fact that these alternatives are not an accurate overview of all options. Consider decoy pricing strategies in Supermarkets, or the existence of £30 in-app purchase bundles of credit in Candy Crush Saga style mobile games.

I’m fascinated by how this effects wellbeing. I have a natural aversion to Facebook, as it inherently prompts us to compare the value of our lives against the (supposed) lives of others. The more money/stuff/fun we have the more we want, with the only fix being to break the cycle.

Narrow your circle, set your own goals and ignore everyone else’s. They’re not you.


Emotional decision making

We assume our decision making is constant, but it is of course heavily influenced by our current state of mind. I’ve always known this about myself (hence my trusty pot of snacks to prevent hunger!), but I’ve been recently surprised by the extent of the effects of emotions on my decision making.

Ariely discusses many more obvious emotional situations, such as hunger, anger, sexual arousal. They’re easy to understand and easy to deal with in everyday life. Frustration is a more intriguing phenomena; it’s hard to identify, lingers for longer, and has a huge impact on my ability to make patient, considered decisions.

This links to another section of Ariely’s discussions, the Cool State vs Hot State. In a Cool State we prioritise important actions and make rationale, long term decisions. In a Hot State we prioritise urgent actions and make reactive, short-term decisions. There’s no avoiding either state, the key is to identify them and act accordingly.


Expectation Effects

If we expect a meal to be awesome, then it probably will be (especially if we paid an extortionate amount for it, though that’s a separate conversation).

Ariely discusses in great depth that our expectations often influence a huge range of factors, from our everyday lives to questioning the very existence of a free market. Economics states that consumers will ultimately decide the price of a product, as they’ll simply stop buying sub-standard items. Behavioural Economics questions this, as the perceived quality of a product is so heavily distorted by our expectation of it. Would you enjoy that iPhone as much if it had a different brand name?

All this bleeds into many topics – economics, marketing, branding, and even self-confidence. I’m an optimistic person and enjoy life. But only recently have I realised that by simply expecting that I’ll enjoy my meal, my new gadget, or my day, I probably will.

As I’ve got older, my confidence has increased to the point where I generally expect that I’ll do a good job on whatever is required. It reminds me of a famous Henry Ford quote…

“Whether you think you can or you think you can’t, you’re probably right.”