summary ofPredictably IrrationalBook by Dan Ariely

first KEY POINT

Our minds arrive at decisions in a way that’s predictably irrational — by comparison

Imagine you are trying to do an annual subscription for your favorite magazine. You have two options — internet-only for $59 or internet and print for $125. Which would you choose? You would probably choose internet-only for $59, like 68% of all respondents.Now imagine there are three options for you to choose from — internet-only for $59, print-only for $125, and internet and print for $125. Which would you choose now? You would probably choose the internet and print for $125, like 84% of all respondents.What has happened here? It’s called “relativity.” It is how our minds make decisions, by comparing and weighing the advantages of one thing or option over the other. It happens this way because we don’t know what we want unless we see it in context. For instance, it explains why our life and career choices are inspired by our role models and mentors.In the magazine subscription example above, the introduction of a third option, a decoy, messed up the seemingly rational decision you initially took; as the print and internet subscription became a steal and the internet-only subscription became less attractive. In fact, the internet-only subscription became free once you chose the internet and print option.

It hurts society too. For instance, there are not enough family practice doctors in the US because most have gone on to Medical Investment Advisory roles in Wall Street firms so as to earn higher, after comparing themselves with their peers in Wall Street.To deal with the relativity problem, make the “circles” around you smaller to boost your relative happiness. At the class reunion, don’t feel compelled to be part of the main conversation in the middle of the room. Find someone on the sidelines to have a quiet conversation with — you will have just as much fun. Shop for houses you can really afford to buy. Change your focus from the narrow to the broad. Don’t use that $3,000 to upgrade your new car seats; rather, invest it in travel, books or on a new wardrobe.This summary shares valuable counsel that helps us make better decisions.