Thinking Err0rs

Predictably Irrational, Revised and Expanded Edition: The Hidden Forces That Shape Our Decisions is a good read. One thing that sets this book apart from others on similar topics is the source of the information. All the data, all the experiments cited here come from the work of the author and his colleagues. This is fresh material. You will not hear for the nth time about an experiment performed in Antonio Damasio’s lab.

The tests are fun. Here is an example. To test how biases shape our taste perception, college students were offered free beer. Finding volunteers must have been easy. The students were asked to try beer A (a standard lager), or beer B. Beer B was A plus two drops of balsamic vinegar per ounce. In a first set of tests, students were told nothing about beers A and B, and were asked which they preferred. Next, other students were offered the same choice, but were told ahead of time that beer B had vinegar added. The third set of experiments was done telling students about the vinegar after they tasted the two beers. How did students like A and B? If they were told nothing, a majority chose B. If they were told about the vinegar ahead of time, they chose A. If they were told after tasting, they chose B. What this tells us is that an expectation of a sour, unpleasant concoction affected what students tasted!

This confirms what we have known for a long time: we see what we want to see, and hear what we want to hear. Our senses do not give us an accurate representation of reality. Our expectations shape our experience.

This is one of the many topics tackled in the book, all through the eyes of an experimenter. Arielly gets us to question our actions, our beliefs, and he does this in an entertaining fashion. Why are free offers so attractive? Why do we overvalue what we have? Some of the questions have deep economic implications: prices can have little to do with supply and demand. Some push us to have a deeper look at ourselves: could we really act so differently when aroused than when calm?

This book is challenging and fun at the same time. Read it.