Along with Martin Lindstrom’s book Buyology, Dan Ariely’s Predictably Irrational demolishes any assumptions that we have which are based on the classical model of a rational consumer. Ariely’s book is a collection of simple experiments and conclusions that show that we do not behave in the way that economists and marketers think we do.
For many of us the most impactful chapter is the first, show how truth is relative. I won’t steal many examples from Ariely’s book, because it would not be fair and I think you would benefit more by reading the book, but here is a great, and scary, example showing how our views are affected by an anchor.
Ariely showed an ad for a one year subscription to the Economist to 100 of his students at MIT’s Sloan Business School, and asked them to select the option they would choose.
Internet only subscription, $59
Print only subscription, $125
Print and Internet subscription, $125
Not surprisingly, none of the business students chose the print only version.
However, the real surprise (for some people) was when Ariely repeated the exercise with a different 100 students, but this time leaving out the print only option.
The table below shows the two sets of results
|
|
All three options shown |
Print only option not shown |
|
Internet only $59 |
16 |
68 |
|
Print only $125 |
0 |
NA |
|
Print & internet $125 |
84 |
32 |
Without the ‘decoy’ of the print only option, 68% of the students chose the cheaper package, compared with just 16% in when ‘print only’ was shown as an option.
Ariely’s explanation is that buyers use the print only as an anchor, and that marketers use it as a decoy. Ariely follows this example with several other cases, in different fields, to show that this pattern is the norm, not an exception.
Ariely then proceeds to challenge assumptions and explore behaviour through the rest of his chapters, at each stage debunking the myth that we behave in a ‘rationale’ way, but equally showing that irrational behaviour is very often predictable.
His chapters include:
- An exploration of free, that makes great complementary reading with Chris Anderson’s recent book called “Free”.
- The way that payment changes relationships, or why you don’t pay your mother-in-law when she makes you a meal.
- The impact of arousal on decision making (or why so much unprotected sex happens).
- Why we over-value things we own, versus things we don’t.
- Why we are more likely to steal a coke than a dollar.
- Why being the last at the restaurant table to order results in us picking options we don’t really want.
Along with Freakonomics, The Undercover Economist, and Buyology, Ariely’s book makes us realise that too many of our traditional assumptions do not work.
Anybody seeking to understand or affect public behaviour, from researchers, to policy maker, to marketer, needs to learn from these messages. It is, often, possible to understand people; it is (often) possible to affect their behaviour, but only when we base our models on the data, not on outdated models of the ‘rationale’ consumer.
Following the book there is also a really interesting website, adding new material and challenging thoughts.
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