Predictably Irrational Summary

 “Humans rarely choose things in absolute terms.”

 We tend to focus on the relative advantage of one thing
over another, and estimate value accordingly.
 “Most people don’t know what they want unless they see
it in context.”
 Gregg Rapp, a restaurant consultant, discovered high-
priced entrées on the menu boost revenue for the
restaurant—even if no one buys them. Why? Because
even though people generally won’t buy the most
expensive dish on the menu, they will order the second
most expensive dish.
 “We are always looking at the things around us in
relation to others.”
 “We not only tend to compare things with one another
but also tend to focus on comparing things that are easily
comparable—and avoid comparing things that cannot be
compared easily.”
 “The more we have, the more we want. And the only cure
is to break the cycle of relativity.”
 “Once we buy a new product at a particular price, we
become anchored to that price.”
 “The basic idea of arbitrary coherence is this: although
initial prices 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’).”
 “Initial prices are largely ‘arbitrary’ and can be
influenced by responses to random questions; but once
those prices are established in our minds, they shape not
only what we are willing to pay for an item, but also how
much we are willing to pay for related products (this
makes them coherent).”
 Price tags become anchors when we contemplate buying
a product or service at that particular price.
 “The first anchor influences not only the immediate
buying decision but many others that follow.”
 Herding happens when we assume that something is
good (or bad) on the basis of other people’s previous
behavior, and our own actions follow suit.
 Self-herding happens when we believe something is good
(or bad) on the basis of our own previous behavior.
 To improve an irrational behavior, ask yourself, “How
did it begin? Second, ask yourself, “What amount of
pleasure will I be getting out of it. Is the pleasure as
much as I thought I would get?”
 With everything you do, you should train yourself to
question your repeated behaviors.
Ariely on decision-making:

We should also pay particular attention to the

first decision we make in what is going to be a
long stream of decisions (about clothing, food,
etc.). When we face such a decision, it might
seem to us that this is just one decision,
without large consequences; but in fact the
power of the first decision can have such a
long-lasting effect that it will percolate into our
 future decisions for years to come. Given this
effect, the first decision is crucial, and we
should give it an appropriate amount of
attention.

 “The sensitivity we show to price changes might in fact

be largely a result of our memory for the prices we have
paid in the past and our desire for coherence with our
past decisions—not at all a reflection of our true
preferences or our level of demand.”
 According to Margaret Clark, Judson Mills, and Alan
Fiske, we live simultaneously in two different worlds—
one where social norms prevail, and the other where
market norms make the rules.
 People will work more for a cause than for cash.
 “No one is offended by a small gift, because even small
gifts keep us in the social exchange world and away from
market norms.”
 “When a social norm collides with a market norm, the
social norm goes away for a long time.”
 “To make informed decisions we need to somehow
experience and understand the emotional state we will
be in at the other side of the experience. Learning how to
bridge this gap is essential to making some of the
important decisions of our lives.”
 Giving up on our long-term goals for immediate
gratification is procrastination.
 When Ariely offered his students a tool by which they
could pre commit to deadlines, they achieved better
grades.
 A good course of action is to give people an opportunity
to commit upfront to their preferred path of action.
 The endowment effect is our tendency to value what we
own more than other people do.
 Our aversion to loss is a strong emotion and one that
sometimes causes us to make bad decisions.
 We assume other people will see monetary transactions
from the same perspective as we do.
 The more work you put into something, the more
ownership you begin to feel for it.
 We can begin to feel ownership even before we own
something (this applies to points of view, too).
 Given a simple setup and a clear goal, all of us are quite
adept at pursuing the source of our satisfaction.
 “Research on stereotypes shows not only that we react
differently when we have a stereotype of a certain group
of people, but also that stereotyped people themselves
react differently when they are aware of the label that
they are forced to wear (in psychological parlance, they
are “primed” with this label).”
 “Since people engage in a cost-benefit analysis with
regard to honesty, they can also engage in a cost-benefit
analysis to be dishonest.”
 “When we are removed from any benchmarks of ethical
thought, we tend to stray into dishonesty. But if we are
reminded of morality at the moment we are tempted,
then we are much more likely to be honest.”
 “Cheating is a lot easier when it’s a step removed from
money.”
 “People are sometimes willing to sacrifice the pleasure
they get from a particular consumption experience in
order to project a certain image to others.”