Predictably Irrational by Dan Ariely

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Predictably Irrational by Dan Ariely
presented by Katie Long

Published in: Technology, Economy & Finance
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  • Predictably Irrational by Dan Ariely

    1. 1. Predictably Irrational Dan Ariely
    2. 2. Behavioural EconomicsBy understanding our irrational quirks wecan retrain ourselves to make betterdecisionsDiscover why people fail to reason properlyTo help you fundamentally rethink whatmakes you and the people around you tick
    3. 3. The Illusion that wemake our own decisions
    4. 4. Organ Donations 100 100 98 100 100% of drivers donating organs 86 75 50 25 28 17 12 0 4 Denmark Holland UK Germany Austria Belgium France Hungary Sweden
    5. 5. Click on the box below if you want to participatein the organ donor program ! ! ! ! ! !
    6. 6. Click on the box below if you don’t want toparticipate in the o rgan do n o r pro g ram! ! ! ! ! !
    7. 7. The Truth About Relativity Why everything is relative even when it shouldn’t be We don’t have an internalvalue meter that tells us howmuch things are worth, rather we focus on the advantages of one thing over another
    8. 8. We like tomake decisions based on comparison
    9. 9. The Cost of Zero CostWhy we often pay too much when we payfor nothing
    10. 10. Lindt vs Hershey ◦ When a truffle was $0.15 and a Kiss was $0.01, 73% of subjects chose the truffle and 27% the Kiss ◦ When a truffle was $0.14 and a Kiss was free, 69% chose the kiss and 31% the truffle ◦ According to standard economic theory, the price reduction shouldnt lead to any behavior change (relative price and expected pleasure should be equal between the two experiments) ◦ The same experiments were conducted with Kisses going for $0.02, $0.01, and free...and free again made a huge difference.• Arielys theory is that for normal transactions, we consider both upside and downside. But when something is free, we forget
    11. 11. The difference between 1¢ and 2¢ is smallbut the difference between 1¢ and free ishugeAmazonFree can have a great deal of power!
    12. 12. The Cost of Social NormsWhy are we so happy to do things but notwhen we are paid toSocial Norms vs Market Norms These shouldn’t cross over
    13. 13. Social norms such as reciprocity are warmand fuzzyMarket norms are explicit and hard - youget what you pay forE.g. Lawyers working for $30/hour vsworking for free to needy employeesSocial norms are more effective in motivatingpeople
    14. 14. The Power of PriceWhy a 50¢ aspirin can do what a pennyaspirin can’tPlacebo EffectPlacebos run onthe power ofsuggestion
    15. 15. Does a pricier medicine make usphysiologically better than a cheapermedicine?E.g. Velodene capsule @ $2.50 (actually vit C)- it worked!When the “pain relief” was dropped to 10¢ -it only worked for half the people
    16. 16. The context of our characterWhy are we sodishonest and whatcan we do about it?
    17. 17. 2 types of dishonesty Typical Crook The person who considers themselves honest
    18. 18. Honesty connected withour desire to pleaseComply with societiesethics Makes us feel good
    19. 19. The TenCommandments Test Benchmark of Ethical Thought
    20. 20. Cheating is one stepremoved from cashCashless Society - Weneed to realise this asdays of cash arecoming to a close
    21. 21. Where are the free lunches?We are far less rational in our decisionmaking than standard economics assumesOur irrational behaviours are systematic andpredictableWouldn’t economics make a lot more sense ifbased on we actually behave rather thanhow we should behave?
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