Predictably Irrational: Book Review

This book presents an interesting overview about behavioural economics and also on on how an individual's decision making process is often at odds with what is objectively beneficial to him or her. Through a series of experiments, the author confirms the idea that the assumptions of perfect rationality that standard economics texts make do not always stand. It is about how “decoys” are used by merchants to confuse you about your choices, and how you would typically react to them. The author also explains some of the factors that influence our decision making: from the influence of emotions to the sometimes agonising choice between options; the pitfalls of procrastination and the lure of free offers. While many of the concepts are profound, the subject matter is presented in a readable and entertaining way. Its applicable to all the readers, because we all make decisions in our day to day life. I especially liked the author's basic empirical approach. There isn't hardly a proposition or theory in the book that hasn't been tested via experiment. This is in many ways similar to Freakonomics, but the only difference is, Freakonomics tries so hard to blow away your mind so that readers(like me) loose interest in the middle. Whereas the author here takes small practical questions, builds experiments with limited variables and sees how people operate on a very small scale.

 

There is so much to consider in the book. You can probably refer to these experiments and findings again and again, for your fascinating conversations with your friends. I recommend this to just about anyone and especially those with an interest in economics or who work for large companies. It is a quick and fascinating read.