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Predictably Irrational

Book Notes

I tried reading Predictably Irrational (affiliate link) about a year ago. I made it about half way through before other books captured my attention. I restarted it at the beginning last week and read through it rapidly. Totally worth reading it. I recommend it highly.

The basic premise of Predictably Irrational is exactly what the title is: people don't act rationally with a lot of things, yet that irrational behavior is somewhat predictable. The book is a gentle introduction to behavioral economics, which doesn't believe that people act completely rational when making decisions about their economic well-being (that rationality being a fundamental belief in most economic models people know about). The book explains that people do a lot of odd things, describes experiments that address the odd things, and gives the outcomes, explanations, and interpretations of the results.

There are immediate applications of the explanations, both from an offense (I'm trying to sell you something) and a defense (I'm trying not to be hoodwinked into buying something I don't really need / want) perspective. The chapter on Free! is great, as well as the section on how we overvalue what we own more than if we don't own it; which explains why, say, people selling an item (car, house, thingy) always want more than the non-owners are willing to pay. We all suck at making decisions when we're sexually aroused, and oddly how price affects the effectiveness of placebos.

I'm glad I read it twice. While I absolutely don't act rationally with a lot of financial items (hello, house next door to Dad), I recognize more frequently now when I'm not. I also notice when I'm being influenced by some of the techniques and observations presented in the book. This self-awareness is fantastic.

So, yeah, highly recommended.

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