Predictably Irrational by Dan Ariely presented by Katie Long

1. Predictably Irrational
Dan Ariely

2. Behavioural Economics
By understanding our irrational quirks we
can retrain ourselves to make better
decisions
Discover why people fail to reason properly
To help you fundamentally rethink what
makes you and the people around you tick

3. The Illusion that we
make our own decisions

4. Organ Donations
100
100 98 100 100
% of drivers donating organs
86
75
50
25 28
17
12
0 4
Denmark Holland UK Germany Austria Belgium France Hungary Sweden

5. Click on the box below if you want to participate
in the organ donor program ! ! ! ! !
!

6. Click on the box below if you don’t want to
participate in the o rgan do n o r pro g ram
! ! ! ! ! !

7. The Truth About
Relativity
Why everything is relative even when it shouldn’t
be
We don’t have an internal
value meter that tells us how
much things are worth, rather
we focus on the advantages
of one thing over another

8. We like to
make decisions
based on
comparison

13. The Cost of Zero Cost
Why we often pay too much when we pay
for nothing

14. Lindt vs Hershey
◦ When a truffle was $0.15 and a Kiss was $0.01, 73% of
subjects chose the truffle and 27% the Kiss
◦ When a truffle was $0.14 and a Kiss was free, 69% chose the
kiss and 31% the truffle
◦ According to standard economic theory, the price reduction
shouldn't lead to any behavior change (relative price and
expected pleasure should be equal between the two
experiments)
◦ The same experiments were conducted with Kisses going for
$0.02, $0.01, and free...and free again made a huge
difference.
• Ariely's theory is that for normal transactions, we consider both
upside and downside. But when something is free, we forget

15. The difference between 1¢ and 2¢ is small
but the difference between 1¢ and free is
huge
Amazon
Free can have a great deal of power!

16. The Cost of Social
Norms
Why are we so happy to do things but not
when we are paid to
Social Norms vs Market Norms
These shouldn’t cross over

17. Social norms such as reciprocity are warm
and fuzzy
Market norms are explicit and hard - you
get what you pay for
E.g. Lawyers working for $30/hour vs
working for free to needy employees
Social norms are more effective in motivating
people

18. The Power of Price
Why a 50¢ aspirin can do what a penny
aspirin can’t
Placebo Effect
Placebos run on
the power of
suggestion

19. Does a pricier medicine make us
physiologically better than a cheaper
medicine?
E.g. Velodene capsule @ $2.50 (actually vit C)
- it worked!
When the “pain relief” was dropped to 10¢ -
it only worked for half the people

20. The context of our
character
Why are we so
dishonest and what
can we do about it?

21. 2 types of dishonesty
Typical Crook
The person who considers themselves
honest

22. Honesty connected with
our desire to please
Comply with societies
ethics
Makes us feel good

23. The Ten
Commandments Test
Benchmark of
Ethical Thought

24. Cheating is one step
removed from cash
Cashless Society - We
need to realise this as
days of cash are
coming to a close

25. Where are the free
lunches?
We are far less rational in our decision
making than standard economics assumes
Our irrational behaviours are systematic and
predictable
Wouldn’t economics make a lot more sense if
based on we actually behave rather than
how we should behave?