Predictably Irrational by Dan Ariely
I was procrastinating on this book & i really wasted that time.This was one of the best books i read on behavior economics – i should have read it in one go.
The research done by Dan Ariely is an eye opener, some crucial decisions are taken irrationally by us.I would not like to spoil the book, but i would post the header of some chapters here.
Why Everything is relative – even if it shouldn’t be ?
Why the price of pearl & everything else is up in the air ?
Why we often pay too much when we pay nothing ?
Why we are happy to do things but not happy when paid to do them?
I think this much will be enough to make you curious.If you have read Freakonomics or SuperFreakonomics, the book takes the same form of writing. There are experiments they conducted & the result they found.Anyone can go to the site of Dan Ariely & participate in his surveys.The principle of Arbitrary Coherence and Endowment Effect shows how doubtful our decisions can be; how our attachments to things seem foolish.When we view something from a 3rd party angle, then only we can have some chances of taking rational decisions.
I find all the behavior economics research amazing & think its the right path for the economics to move on to.I personally believe that the economics theories being taught to us have slashed off the role of humans.What ever role a human decision makes in economics is standardized according to Adam Smith’s theories only.The inclusion of Human Being taking irrational decision in the economic & financial transactions has to be researched more, so that superfluous extrapolation & speculation should reduce.All this mess we are now in is the result of all the financial decision which were inconsiderate of the irrational decisions people make.
A really good book, worth buying at least worth keeping an e-copy of it. Do read it if you like behavioral economics.