Dan Ariely is the James B Duke Professor of Psychology and Behavioral Economics at Duke University. He is the founder of The Center for Advanced Hindsight and co-founder of BEworks, which helps business leaders apply scientific thinking to their marketing and operational challenges. His books include Predictably Irrational and The Upside of Irrationality, both of which became New York Times best-sellers. as well as The Honest Truth about Dishonesty and his latest, Irrationally Yours.
Ariely publishes widely in the leading scholarly journals in economics, psychology, and business. His work has been featured in a variety of media including The New York Times, Wall Street Journal, Washington Post, Boston Globe, Business 2.0, Scientific American, Science and CNN.
Question: What is rationality?
Dan Ariely: So I picked the standard economic definition of rationality, because once you start incorporating all kinds of things into rationality, it just becomes a meaningless concept. So if you say people are rational; but yes, but I also care about your welfare; and let’s add that as another component of futility to the equation; every time you’re making up another part of futility, it means that you are kind of undermining a concept of rationality. And you know I’m a behavioral economist, which means most of my work is showing that people are irrational. But I love economics. Economics is beautiful. It’s a wonderful theory. It’s a great perspective to have. And I don’t want to eliminate that. I think it has incredible amount of insights. However what behavioral economics teaches us is that economics is not the whole story. It’s not everything. And when you come to do policies, or inventions, or to give recommendations to people on how they want to live their life, you want to take as complete picture as you want . . . as you can. So you take the parts of economics that are accurate, and you want to feel as much as you can about that from how people actually behave.
Recorded on: Feb 19 2008
The solution is from time to time to hire people you don’t think would work out.