Predictably Irrational


If only we understood our cognitive limitations as well as our physical limitations, the world would be a more rational place.

Behavioral Economist Dan Ariely thoroughly investigates the way we respond, the decisions we make and how they are affected by the context they are made within. Turns out: the world is full of placebo’s, not only in medicine but everywhere around us, as Ariely shows; the perceived quality of coffee can increase when you improve the environment it’s served in. This is great news for advertisers, as on a much larger scale it also works wonders. In blind tasting tests of Coca Cola versus Pepsi, the majority chose Pepsi, but when the tasting test was branded, the majority chose Coca Cola. Hats off to Coca Cola for doing an excellent marketing job!

“Patients with chest pain felt the same immediate pain relief when they thought they’d been through surgery to those patients who had actually had the procedure.”

This is a relatively innocent example, but it works closer to our hearts as well: especially when it concerns our health, something nobody would compromise on. Ariely explains how a group of patients with chest pain felt the same immediate pain relief when they thought they’d had Mammary Artery Surgery to the patients who actually did have the surgery. In fact the only thing the surgeon did was make a small incision in the chest and sew it back up again. In another test, a team set up a bogus testing area of a new high-end pain killer, “very expensive, very effective”. Where in fact it was only a tablet of Vitamin D. The test-subjects experienced less pain when given electric shocks while under influence of the drug, than when they weren’t. However, when the drug was advertised as ‘cheap’, but still ‘very effective’, the test-subjects, perhaps predictably, still felt less pain with the placebo drug than without, but more pain than when it was advertised as expensive. It seems our thoughts are governed more by expectations and context than by rationality.

A truly fascinating read which will have you looking for your own potential irrational behavior in every decision you make.