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: Is there a pattern to human reason?
Dan Ariely: So you know there’s one way to be rational, and there’s a lot of ways to be irrational. And that’s part of the issue with this field – is that we show many ways to be irrational, but it’s not just one system. It involves a lot of different things that come to play in different areas of our lives. And the way to understand it and to think about how we fight again them is to think about what particular rationalities working in each particular aspect of our life – whether it’s emotion, or relativity, or the influence of initial decisions, or the role of expectations – all of those can have input on us, and we have to understand exactly which irrational forces are working in each particular case.
Quesiton: Can we predict our own irrationality?
Dan Ariely: So again it’s . . . I know it’s unsatisfactory, but there’s no single silver bullet. The kind of things I’m hoping people will get out of the book is to recognize some early warming signs for some of those things. So for example I have a chapter about free that shows that when something is for free we jump on it too much, and in fact sometimes end up paying a high price. What can you do as a consequence? You can just slow down. You can say I know free is tempting. But when I see it in the future, what I should be doing is just slow down and think carefully about whether this is the right or the wrong thing. It turns out that real estate brokers can really change how we view houses if they show us houses that are outside of our reach. They might say look, let’s look at this house. It’s $200,000 more than what you were planning to buy. I don’t think you should buy it, but just have a look. There’s no “just have a look”. Seeing that will change your reference price and the way you think about houses. Don’t let them show you this house. So there’s some warning signs that we could get. The other thing is there are some things we can’t help. So have you ever gone hungry to a supermarket and bought too much food? Everybody does. Have you learned after one time never to repeat this again? Nobody ever does. What is the issue here? When emotion takes over – hunger in this case – our stomach seems to grow with it. We seem to be very hungry and we don’t think this hunger will end. So what can we do? When hunger takes over we will become different people that are not connected to our non-aroused, non-emotional self. So what can we do? We can make a rule for ourselves. We can say I know I make this mistake. And if these emotions are aroused in me I will behave badly. So either go to the supermarket . . . Never go hungry. Or make a list and never, never, never deviate from the list.
Recorded on: Feb 19 2008