, by Dan Ariely
magazine (Brazil), April 14, 2008by S
rgio Teixeira Jr. (translated CB)
If there is a thread of continuity between Adam Smith and the complex mathematicalformulas that move the international financial markets of the twenty-first century, it is thebelief that the human being, at least when it comes to material possessions, is a rationalbeing. We evaluate all available options, know the implications of all of then, and alwayschoose the best path. We do this every day, several times a day. Bad choices? Noproblem: the proverbial "invisble hand of the market" is there to set us back on the pathtoward reason and well-being. Based on these assumptions, generations of economistshave been drawing conclusions about everything from how the price of bread is establishto public policy on health and education. This is precisely the type of economic theory thata provocative new book does not deal with.
, by MIT professor DanAriely, sets out to demonstrate precisely the opposite: that we human beings are irrational.Much less sensible and calculating than the
described by traditionaltheory. Much more susceptible to giving in to psychological stimuli we scarcelycomprehend but which are easy to identify. Our capacity to act against our own bestinterests is so great that it can even be predicted, Ariely argues. "Understanding howpredictably irrational we are is the point of departure for improving our decision-makingand changing our lives for the better."Dan Ariely is one of the new exponents of a relatively new branch of economics known asbehavior economics. Instead of dealing with spreadsheets, charts and models, Arielyconcentrates on experiments that show how people really behave when buying, selling,working, changing jobs, and so on. His studies overlap with psychology, because they tryto understand how various emotions -- rage, fear, sexual desire -- are fundamental toevery economic decision we make in our daily lives. Though it does not enjoy the prestigeof conventional economic theory, behavior economices is conquering space in theacademic world. In 2002, The Nobel Prize in economics went to psychologist DanielKahneman for his studies on decision-making. Ariely follows the same path, and his bookrecounts dozens of experiments that might seem trivial, but which are surprisinglyrevealing about the errant ways of our mind.
Why you should read this book
In a light-hearted and amusing style, Ariely points out how capable we are of makingincorrect decisions — without even being aware of it."We are much less rational than traditional economic theory assumes. Furthermore, our irrational behavior is not random. It is systematic and, as we will constantly insist,predictable"In a chapter provocatively titled "The Fallacy of Supply and Demand,' he shows how our relationship to prices is subject to the most probable influences [sic]. Ariely conducted atest involving 55 MBA students. Each received a list of items such as wine, computer equipment, books and chocolates. Each student wrote, beside each product, the last two