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So, you think you’re rational?

Monday, October 11, 2010

The Upside of Irrationality (The Unexpected Benefit of Defying Logic at Work and at Home) by Dan Ariely is the most academic of the three books on this page and comes after his earlier best-selling Predictably Irrational. This intensely researched work is also quite entertaining, with thought-provoking insights into the irrational side of human decision-making and the science of behavioral economics.

When it comes to motivations, we are less like the ‘hyper-rational’ Mr. Spock and more like the fallible, myopic, vindictive, emotional, biased Homer Simpson. How can we get the most good and least bad out of ourselves when making choices about our money, our relationships and our happiness?

Here too, there is a minor experiment called the ultimatum game. One player is given $20 with the express brief to distribute it between himself and another player. A fair-minded player might split the amount and share $10 with the other. A selfish player might decide on giving the other just $1, while retaining $19 for himself. If the receiver accepts the deal, the two players collect their shares. If the receiver rejects the deal, both walk away with nothing. Were humans perfectly rational, the receiver would accept whatever is offered: even a dollar is better than nothing! Instead, researchers find that receivers will reject an overly lopsided deal, gladly giving up their shares just to punish the stingy giver.

The author provides some interesting situations as examples to propound various hypotheses about human behaviour. One is the Ikea effect, which makes us over value something we have made ourselves, even if it happens to be a wobbly bookcase assembled form a kit. He has carried out numerous experiments to prove his point, also employing the help of illustrations, graphs, charts and drawings.

Revenge is one of the deepest-seated instincts we have. What exactly are the mechanics and motivations underlying this primal urge? What drives us to spend our own time, money, and energy and even take risks to make another party suffer? Amusing chapters on human adaptability and online dating. Enjoyable, enlightening.

The Upside of Irrationality
By Dan Ariely
Price Rs.399


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