Predictably Irrational

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Predictably Irrational
The book ‘Predictably Irrational by Dan Ariely’ is quite an interesting read as it delves
into the behavioral aspects of economics like never before. The author Dan Ariely is a renowned
behavioral economist and has demonstrated his theories using well-crafted experiments that
demonstrate how the irrational behavior of humans is so entrenched that it is easy to predict the
illogical reactions of people in any dilemma. The most interesting aspect about the book is how
he uses experiments to demonstrate the irrational behavior of people. This essay will expound on
the interesting aspects of the book and how it relates to marketing.
Traditional economics is based on the dependability of humans to make rational decisions
after evaluating the options available carefully. In theory, doing a cost-benefit analysis is the
wise thing to do before making a decision. However, Dan Ariely believes that people cannot be
relied upon to act rationally. What is even more interesting is how I could relate to the
experiments in the book and realize just how predictably irrational I have become. For example,
the Chapter on ‘The Cost of Zero Cost’ explains why people tend to buy things they do not need
just because of the offer of something extra for free. I could easily see myself falling for the trick
experiment on chocolates by choosing the ordinary chocolate that was being offered for free
rather than opt for the high quality chocolate that was being offered at a fairly lowered price.
Economics and marketing are based on the fundamental element of rationality which
provides the basis for theories, recommendations and predictions (Berreby). However, Dan
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Ariely clearly illustrates how humans have become irrational and the marketing principles based
on rationality can no longer be deemed satisfactory. Ariely’s theory on expectations explains
how people end up having the experience they want to have. He uses the example of how people
often opt for a more expensive drug rather than a cheap one even though the effects of the drug
might be the same. They end up feeling better after taking the more expensive drug which is just
a matter of psychology. This is important in marketing because it helps companies in
determining the pricing of their goods because by pricing their goods at an extremely low price
they may end up missing out on customers because the consumers relate price to quality.
Another aspect of the book that relates to marketing is the theory of ‘anchoring’. In Chapter 2 of
the book, he explains how a certain Pearl dealer got to make the elite women in the society to
buy worthless black pearls by simply overpricing the product (Ariely 24). He achieved this
simply because humans are guided by their first impression of something and the impression
becomes imprinted such that the initial price of a commodity will form the basis for future
prices. This pricing is also based on the law of human action that states that if you want a person
to covet something, you need to make the commodity difficult to attain (Ariely 25).
In conclusion, the book is quite interesting as it gives the reader can relate to several
aspects being discussed in the book. The many theories and chapters in the book relate directly
or indirectly to marketing, for example, the theory of expectations and the theory of anchoring.
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Works Cited
Ariely Dan. Predictably Irrational. The Hidden Forces that Shape our Decisions, Harper Collins
Publishers, 2010.
Berreby David. “Emonomics”. New York Times, 16 Mar. 2008, Accessed 10

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