Are you single? Here’s a surprising tip on how to attract potential dating partners at a club: bring along a friend who looks similar to you but is slightly less attractive. This will greatly increase your chances of success. Predictably Irrational? Yes!
Why?
Our minds are wired to seek comparisons, often using the easiest ones available. By bringing a slightly less attractive friend, you provide potential dating partners with an easy comparison, making you appear more attractive. Instead of comparing numerous different people, they see you as preferable. This effect isn’t limited to social situations; marketers use similar tactics with “decoy products” to make other items seem cheaper by comparison. For example, some restaurants overprice the most expensive item on their menu so customers feel the second most expensive item is a better deal.
While comparisons can help us make decisions, they can also cause unhappiness. Constantly comparing salaries, clothes, or cars can lead to envy and dissatisfaction. James Hong, cofounder of Hotornot.com, expressed this sentiment after selling his Porsche Boxster: “When you get a Boxster, you wish you had a 911, and people with 911s wish they had a Ferrari.”
Predictably Irrational Key Idea #1: When we’re offered something for free, our rational thinking goes out the window.
Few things provoke irrational behavior like the word “free.” For instance, people often take home useless free keychains from conferences or buy two unnecessary products just because the third one is free. Free is not just a price; it’s a powerful emotional trigger.
In a study, people chose Lindt truffles for 15 cents over Hershey’s Kisses for one cent. When prices were changed to 14 cents for truffles and zero for Kisses, 69% chose the free Kisses. The zero price effect illustrates how the absence of a downside makes free items seem far more valuable than they are. Companies like Amazon use this by offering free shipping over a certain amount, encouraging additional purchases.
Policy makers can leverage the power of free to promote public health initiatives, like offering free cholesterol checks to encourage regular monitoring.
Predictably Irrational Key Idea #2: The first price number we hear affects what we are willing to pay later.
How much would you pay for a nice bottle of wine or a box of Swiss chocolates? Surprisingly, our willingness to pay is influenced by arbitrary numbers we’ve recently encountered. This phenomenon, known as arbitrary coherence, means we use the first price we’re quoted as an anchor to determine reasonable prices for future purchases.
For example, if a new LED television is priced at $1200, future prices are compared to this anchor. Offers at $1000 seem like a deal, while $1400 feels expensive. This effect persists even in unrelated contexts, like writing down the last two digits of your social security number before bidding in an auction. Higher numbers lead to higher bids.
Predictably Irrational Key Idea #3: We overvalue what we own.
At Duke University, students camp out for days to enter a lottery for basketball tickets. After the lottery, those who won tickets valued them at $2400, while those who didn’t win wouldn’t pay more than $170. This stark difference arises from the endowment effect: once we own something, we value it more highly.
We fall in love with what we own and focus on potential losses more than gains. Sellers value their tickets based on what they could experience, while buyers think of other things they could do with the money. This applies to opinions too; investing time in advocating an opinion makes us stubbornly attached to it.
Predictably Irrational Key Idea #4: Our experiences are shaped by our expectations.
Pepsi and Coke both claimed superior taste, but blind taste tests favored Pepsi, while branded tests favored Coke. Expectations, shaped by branding and past experiences, influence our perceptions. For instance, knowing a movie has great reviews enhances our enjoyment.
This extends to medicine: the placebo effect demonstrates that expecting a drug to work makes it more effective. More expensive medicines are perceived as more potent. Similarly, people perform better on tasks after paying more for an energy drink, demonstrating that expectations, even about price, shape our experiences.
Predictably Irrational Key Idea #5: People’s responses to your requests depend on whether they fall under social or market norms.
Why would your mother be offended if you offered to pay her $50 for dinner? And why do employees refuse to be paid in hugs? We operate under two sets of norms: social and market. Social norms involve friendly, unpaid favors, while market norms involve calculated exchanges.
Invoking the wrong norm can be disastrous. For example, ending a date with a payment offer will likely offend. Market norms make people selfish, as seen when lawyers refused to offer cheaper services but agreed to work for free. When requesting favors, consider which norms you are invoking. Once market norms are in play, reverting to social norms is difficult.
Predictably Irrational Key Idea #6: People are prone to dishonesty, but not wildly so.
Would you rob a bank or take a Coke from the office fridge? Studies show people are a little dishonest, like exaggerating quiz scores for small rewards. Interestingly, cheating doesn’t increase when detection is unlikely. However, non-cash rewards increase dishonesty as they’re easier to rationalize.
Priming honesty can reduce cheating. In one study, recalling the Ten Commandments before a quiz eliminated cheating. Just thinking about honesty helps us stay truthful.
Predictably Irrational Key Idea #7: Dr. Jekyll sets our rational long-term goals, but we must fight Mr. Hyde’s irrationality to reach them.
Ever set a goal to eat healthier or save money, only to relapse? Our rational side, like Dr. Jekyll, sets goals, but our impulsive side, Mr. Hyde, often sabotages them. This is why teens struggle with safe sex despite knowing the risks.
Acknowledging our weaknesses helps combat procrastination. For example, students who set smaller, spaced-out deadlines performed better than those with one big deadline. Precommitting to deadlines or tying unpleasant tasks to short-term pleasures can help achieve long-term goals.
Predictably Irrational Key Idea #8: People are obsessed with keeping their options open, even when it hurts them in the long run.
In 210 BC, after the Chinese commander Xiang Yu had ferried his army across the Yangtze River, he set fire to his own ships. He did this to show his troops that retreat was not an option. In response, they fought so ferociously that they won nine battles consecutively.
Commander Xiang Yu’s troops won battles after he burned their ships, eliminating retreat as an option. Humans instinctively keep options open, but this can be harmful. In a study, participants sacrificed money to keep options open, even in a game.
Indecisiveness can lead to mediocrity. Sometimes closing options, like focusing on family over career, can be beneficial. Prioritizing what truly matters requires difficult choices and closing some doors.
Final summary
The key message in this book:
We humans are deeply irrational in most of the daily decisions we make. From deciding what price to pay for a television to struggling to eat healthier foods, our choices and behavior are guided by irrationality. But the good news is that we need not be helpless victims: through vigilance and caution we can try to avoid irrationality and act in our best, long-term interests.
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