Reviewed Date: June 30th
We are not as rational as we think we are. Several factors influence our behavior every day. You might say that you have purchased a thing by your decision, but you fail to see what motivated you to purchase that in the first place. We are blinded to recognizing forces because most of them happen automatically.
“Predictably Irrational” is the first behavioral economics book I read. I absolutely loved it. Dan’s writing hooks from the beginning. If you are starting to read books on behavioral economics, read this book first.
➡️ My Takeaways from This Book:
⚡Humans are afraid of loss. When we purchase a thing, there is a possibility that our decision might go wrong. But when it comes to free products, because we are getting them freely, there is no possibility of being wrong. That’s why we stand in a long queue to get free product. This is called the zero price effect.
⚡When we believe beforehand that something will be good, therefore, it generally will be good—and when we think it will be bad, it will be bad. That’s how expectations work.
⚡Expectations also shape stereotypes. A stereotype, after all, is a way of categorizing information in the hope of predicting experiences. Our brain cannot start from scratch at every new situation. Stereotypes provide shortcuts in our never-ending attempt to make sense of complicated surroundings.
⚡When given the opportunity, many honest people will cheat.
⚡There are two mechanisms that shape the expectations that make placebos work. One is belief—our confidence or faith in the drug, the procedure, or the caregiver. And the second mechanism is conditioning. The body builds up expectancy after repeated experiences and releases various chemicals to prepare us for the future.
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