Predictably Irrational

…is a new book by Dan Ariely, a behavioral economist at MIT. The New York Times has an interesting article on his book and its main thesis, that it is more often than not irrational to keep all our options open. Ariely advocates eliminating some of those options as they often consume an inordinate amount of effort and transactions cost. He illustrates his argument with a simple game where the reader is asked to look for money behind three doors on the screen. After you open a door by clicking on it, each subsequent click earns some money, with the sum varying each time. If you don’t click a door it shrinks each time you click on another door, and the neglected door eventually disappears. Your quest is to get as much money as possible, of course. As the game shows, if you keep your options open by making sure the doors don’t disappear, you earn less money than if you keep clicking on the same door all the time. Some more examples…

“…You don’t even know how a camera’s burst-mode flash works, but you persuade yourself to pay for the extra feature just in case. You no longer have anything in common with someone who keeps calling you, but you hate to just zap the relationship…Your child is exhausted from after-school soccer, ballet and Chinese lessons, but you won’t let her drop the piano lessons. They could come in handy! And who knows? Maybe they will…”

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Explore posts in the same categories: Economics, Random

One Comment on “Predictably Irrational”

  1. Jürgen Says:

    Hmm, this is a good upgrade to Heinz von Foerster’s credo “Handle stets so, dass sich die Zahl deiner Möglichkeiten erweitern.” (act always so as to increase the number of choices.) Many choices should not lead to keeping all options open. That’s hard. Game theory comes to mind when reading this.


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