Predictably Irrational By Dan Ariely

“Giving up on our long-term goals for immediate gratification, my friends, is procrastination.”

We are
- inconsistent
- irrational
Decoy
- Decoy duck
  - very effective hunting tool
  - placed in water to attract other ducks
  - it increases the confidence of ducks that the water is safe to swim
- Our brain
  - needs a frame of reference for everything
  - from making decisions to doing everyday things
  - we prefer things we can compare
  - we instinctively avoid things we can’t compare
  - we prefer when things are in competition
    - Apple vs Android
- Comparison
  - buying a shirt, picking a college, choosing a partner
  - how can we judge the value of something unless we compare it with something similar?
- Decoy in marketing
  - If the 2 options of product are not easily comparable
  - they create an option that is designed to make
    - one of the choices look more attractive
  - this is a DECOY OPTION
  - they don’t want you to pick the decoy
  - they want to nudge the buyers towards the option more beneficial to them
  - By setting up a larger or smaller BAD option in the mix → makes us think we are getting a better offer
- How to avoid?
  - do a mental check every time you are buying something
    - are you getting what you want?
    - is this the price you are willing to pay?
    - does the lowest option fulfill you need?
    - try pointing out a decoy if you see one
  “we usually think of ourselves as sitting the driver's seat, with ultimate control over the decisions we made and the direction our life takes; but, alas, this perception has more to do with our desires-with how we want to view ourselves-than with reality”
Expensive Coffee
- Older generation
  - grew up pre-Starbucks era
  - coffee houses were way cheaper back then
  - Starbucks seems very expensive in comparision
- Newer generation
  - grew up with Starbucks
  - their earliest memories of coffee prices = Starbucks price
  - they don’t have a cheaper comparision
  - so they don’t find it expensive
- Our Brain
  - imprints first-seen prices as anchors
  - that price becomes the frame of reference
    - all future prices of this same product/or relative products in same category
    - are judged relative to this anchor price
  - often our actions are not thought through or judged on their own merits
- Example
  - Black pearls
    - 1970s - no market for these
    - Harry Winston created the market
      - showcasing these with jaw-dropping price tags
      - showed the pearls in settings with precisous gems
    - the anchor was quickly set
      - at the same level as gemstones
  - Starbucks
    - made it’s stores, menu and experience very different from all existing coffee shops
    - this is because it didn’t want people to use old anchors to compare it’s coffee
    - Created a new anchor for itself
- how did you get hooked to Starbucks?
  - more than a coffee
    - companies hire influencers and celebrities to post pictures with their product
    - people follow soon
  - They sell a myth that you need it to start your day
  - We simply do something based on what we see other doing
    - or what we have done in the past
  - often our actions are not thought through or judged on their own merits
    - a typicial Frappuccino
      - With 410 calories and 59 grams of sugar in a 16-ounce grande
    - Coca Cola
      - 16 ounce contains 190 calories and 52 grams of sugar
  - Lots of people in the coffee shop OR long queues at a restaurant
    - signals our mind that it must be a good place to eat
    - why else so many people are waiting to get inside
    - they must know something we don’t
  - Is this really worth it?
    - Am i getting as much pleasure from this as i thought?
    - could i be equally satisfied with a cheaper option?
    - is it really just about coffee?
- How to avoid?
  - Example
    - you are looking a new house
    - first option - you may not buy it but this will now become your anchor price
    - every house you see after this, your mind compares to the anchor
    - Anything lower than the anchor → seem like a good deal even if it’s not
  - Examine the purchase on it’s own merits
  - Consciously say to yourself that other options are not similar and i need to look just a this option alone
  - Question yourself regularly on all decisions
    - especially on repeated behavior
    - Think about the alternatives
    - think whether
      - it’s really necessary
      - it’s adding value
  “most people don't know what they want unless they see it in context.”
Free
- We are always happy to hear it
- Example
  - long queues for sales
  - crowd outside free food offers
  - conference attendees grabbing fistfuls of free keychains
  - adding Rs. 5000 worth of stuff (you don’t need ) in cart just to get Free shipping
- Fear of Loss
  - this is what drives this behavior
  - when we pay for something → there is always a risk that we may feel that we made a bad deal
    - i.e. a risk of loss
  - with Free stuff → there’s no such risk of loss
    - atleast we can’t see it
- Free offers lead us to make bad decisions
- How to avoid?
  - next time you notice a freebie
  - remind yourself → NOTHING IS FREE
    - you always pay by either
      - your time
      - your free space
      - your health or
      - the quality
  “People are willing to work free, and they are willing to work for a reasonable wage; but offer them just a small payment and they will walk away.”
Motivation
- What is the best motivator?
  - Money - ❌
- Money has a very important role to play (especially in a work setting)
  - but it never motivates anyone to go the extra mile
- Better way?
  - invest in consciously creating social relationships
  - build a deeper connection with them
- We all live in 2 worlds
  1. one with Social norms
    1. the rules of friendship and relationships
    2. people give their all for
      1. a CAUSE
      2. Love
      3. Pride
  2. one with Market norms
    1. where everything is transactional
    2. all about give and take
- Mix & Match
  - Introducing Market norms into Social relationships → BAD IDEA
    - don’t tell people how much you paid for their gift
    - don’t repay someone with cash
    - don’t bring money in conversation
  - Reverse | brining social norms into workplace → Works very well
    - create environment of trust
    - be open with your team
    - have conversations beyond work
    - praise them openly
- over time - non cash rewards, recognition will prove more rewarding
Procrastination
- Everyone procrastinates and puts off work | some of the time
- We use things like
  - we delay
  - we slack
  - we check social media accounts
  - we clean closets or kitchen cabinets
- Our Brain
  - “There’s plenty of time”
  - Immortality myth
    - subconsciously we believe we will live forever
    - we have more than enough time to do everything
    - so we can delay things for now
- We delay so many things
  - saving money
  - starting a diet
  - assignments
  - writing a diary
  - health checkups
  “people are sometimes willing to sacrifice the pleasure they get from a particular consumption experience in order to project a certain image to others.”
- How to fix?
  1. Best remedy
    1. External authority
    2. have someone impose deadlines and hold you accountable
    3. we are more likely to listen and fall in line → if someone is ordering you to get to work
    4. involving others in your activity
      1. takes out the decision of whether or not to get started
      2. going through the “don’t feel like” loop everyday
  2. Self imposed committments
    1. committments with penalties
    2. works better than no ‘plan of action’
    3. Pay for things upfront
      1. putting off health checkups
      2. pay your doctor upfront
      3. redeemable only if you turn up on time for the appointment
Don’t keep your options open
- People want to do everything
  - be everything
  - want everything
  - don’t want to miss out on any opportunity
  - they want to travel every road
  - have a plan B
  In running after things that may be important, we don’t spend enough time on what is important
- Current option
  - if you are not giving it your undivided attention
    - you are not likely to derive the maximum possible value from it
  - if you have a lot of items in your priority list → then you don’t have any item in your priority list
  - Children are moved from activity to activity
    - not allowing them the chance to savor and deeply understand any single knowledge
  - We date multiple people
    - without knowing any single one of them deeply
  - We keep switching jobs
    - hoping to find our passion
    - rather than committing to making a good career
  - We keep changing apartments
    - hoping to find the perfect match
    - rather than trying to make it our home
- In order to keep your options open
  - you may miss out on what’s truly valuable
- How to fix?
  - Start consciously closing doors
    - you’ll save yourself time, effort and money
  Jordan Peterson
  
  If you concentrate solely on your career you can get a long way in your career and I would say that's a strategy that a minority of men preferentially do. that's all they do they worked like 70/80 hours a week. They go flat out on their career.
  
  They're staking everything on the small probability of exceptional status in a narrow domain But it's it's hard on them. They don't have a life. It's very difficult for them to have a family. But maybe that’s the price you have to pay to be world class at something.
  - Give up List
    - despite the famous quotes saying never to give up
    - all successful people give up all the time
    - Giving up on things to spend time on just a few is critical
    “a quitter never wins and a winner never quits.” ❌
  - Sunk cost fallacy
    - it’s the time, or money, or sweat equity that you’ve put into something, which makes it hard to abandon
    - be aware why you can’t give up on something
    - is it because you really want it
    - or is it because you feel you have invested too much time into it and now you feel stupid giving up
  Learn to appreciate the upside of quitting—because you can’t solve tomorrow’s problem if you aren’t willing to abandon today’s dud. – Steven D. Levitt & Stephen J. Dubner