Dan Ariely

Predictably Irrational, Revised and Expanded Edition

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Youhas quoted4 years ago
Sigmund Freud explained it this way. He said that as we grow up in society, we internalize the social virtues. This internalization leads to the development of the superego. In general, the superego is pleased when we comply with society’s ethics, and unhappy when we don’t. This is why we stop our car at four AM when we see a red light, even if we know that no one is around; and it is why we get a warm feeling when we return a lost wallet to its owner, even if our identity is never revealed. Such acts stimulate the reward centers of our brain—the nucleus accumbens and the caudate nucleus—and make us content.
Eugene Matveyevhas quotedlast year
It seems then that instead of consumers’ willingness to pay influencing market prices, the causality is somewhat reversed and it is market prices themselves that influence consumers’ willingness to pay. What this means is that demand is not, in fact, a completely separate force from supply.
Youhas quoted4 years ago
But the second, more important moral—one that we are just beginning to understand—is that trust, once eroded, is very hard to restore.
Youhas quoted4 years ago
I suspect that most people and companies miss or ignore the fact that trust is an important public resource and that losing it can have long-term negative consequences for everyone involved. It doesn’t take much to violate trust. Just a few bad players in the market can spoil it for everyone else.
Дмитрий Волыхинhas quoted2 months ago
As H. L. Mencken, the twentieth-century journalist, satirist, social critic, cynic, and freethinker noted, a man’s satisfaction with his salary depends on (are you ready for this?) whether he makes more than his wife’s sister’s husband. Why the wife’s sister’s husband? Because (and I have a feeling that Mencken’s wife kept him fully informed of her sister’s husband’s salary) this is a comparison that is salient and readily available.*
Adilbek Rustemovhas quoted5 months ago
s H. L. Mencken, the twentieth-century journalist, satirist, social critic, cynic, and freethinker noted, a man’s satisfaction with his salary depends on (are you ready for this?) whether he makes more than his wife’s sister’s husband. Why the wife’s sister’s husband? Because (and I have a feeling that Mencken’s wife kept him fully informed of her sister’s husband’s salary) this is a comparison that is salient and readily available.*
Adilbek Rustemovhas quoted5 months ago
That’s a lesson we can all learn: the more we have, the more we want. And the only cure is to break the cycle of relativity.
Adilbek Rustemovhas quoted5 months ago
If we are thinking of buying a new house, we can be selective about the open houses we go to, skipping the houses that are above our means. If we are thinking about buying a new car, we can focus on the models that we can afford, and so on.
Jan Zaleskihas quoted6 months ago
My own approach is to try to view all transactions (particularly large ones) as if I were a nonowner, putting some distance between myself and the item of interest. In this attempt, I’m not certain if I have achieved the uninterest in material things that is espoused by the Hindu sannyasi, but at least I try to be as Zen as I can about it.
Jan Zaleskihas quoted6 months ago
Giving up on our long-term goals for immediate gratification, my friends, is procrastination.
Jan Zaleskihas quoted6 months ago
we go about our daily lives, we are often asked to invest effort in recycling, spending time on a neighborhood watch, helping in our kids’ schools, volunteering in a soup kitchen, and much more. In each of these cases, one could argue that taking part in these activities makes little economic sense. Why not pay someone to recycle for us, watch our neighborhood, help in our kids’ schools, or hand out food in the soup kitchen? Sure, it might be economically inefficient, but investing effort rather than cash might help keep us in the domain of social norms and consequently take into account the welfare of others.
Jan Zaleskihas quoted6 months ago
The point is that while gifts are financially inefficient, they are an important social lubricant. They help us make friends and create long-term relationships that can sustain us through the ups and downs of life. Sometimes, it turns out, a waste of money can be worth a lot.
Jan Zaleskihas quoted6 months ago
But if you had to hire people of the same caliber they would cost you an arm and a leg.
Jan Zaleskihas quoted6 months ago
For example, what happens when a customer’s check bounces? If the relationship is based on market norms, the bank charges a fee, and the customer shakes it off.
Jan Zaleskihas quoted6 months ago
Here are some answers. Asking a friend to help move a large piece of furniture or a few boxes is fine. But asking a friend to help move a lot of boxes or furniture is not—especially if the friend is working side by side with movers who are getting paid for the same task. In this case, your friend might begin to feel that he’s being used. Similarly, asking your neighbor (who happens to be a lawyer) to bring in your mail while you’re on vacation is fine. But asking him to spend the same amount of time preparing a rental contract for you—free—is not.
Jan Zaleskihas quoted6 months ago
This leads me to a final thought: when you’re in a restaurant with a date, for heaven’s sake don’t mention the price of the selections. Yes, they’re printed clearly on the menu. Yes, this might be an opportunity to impress your date with the caliber of the restaurant. But if you rub it in, you’ll be likely to shift your relationship from the social to the market norm. Yes, your date may fail to recognize how much this meal is setting you back.
Jan Zaleskihas quoted6 months ago
Indeed, just thinking about money makes us behave as most economists believe we behave—and less like the social animals we are in our daily lives.
Jan Zaleskihas quoted6 months ago
As the room quieted down, the first group saw this message appear in front of them: “In a few moments we are going to play a new unpleasant tone over your headset.
Jan Zaleskihas quoted6 months ago
What were we trying to prove? The existence of what we called arbitrary coherence. The basic idea of arbitrary coherence is this: although initial prices (such as the price of Assael’s pearls) are “arbitrary,” once those prices are established in our minds they will shape not only present prices but also future prices (this makes them “coherent”). So, would thinking about one’s social security number be enough to create an anchor? And would that initial anchor have a long-term influence? That’s what we wanted to see.
Jan Zaleskihas quoted6 months ago
No flashes of lightning illuminated my laboratory; nor was there a baying of the hounds on the moor.
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