Dan Ariely: Confronting Irrationality

Dan Ariely’s genius in Predictably Irrational is for simple social experiments that become giant public parables. Here’s how playing with the taste of beer, for example, takes him to the Israeli-Palestinian impasse: in the student pub at MIT, where Ariely taught, drinkers much preferred the “MIT Brew” to straight Budweiser — unless they were told in advance that “MIT brew” was Budweiser doctored with a few drops of balsamic vinegar. If they knew beforehand what they were drinking, a sour expectation overrode the pleasure of the experience. Moral: preconceptions rule. Application: since memory and preconditioning are so irremediably different between Israelis and Palestinians, only a strong and fair third-party can lift them to a resolution.

Click to listen to Chris’s conversation with

Dan Ariely (37 minutes, 14 mb mp3)

Dan Ariely’s measure of irrationality

What could he learn at Duke University from the prolonged test of wills by which “Final Four” basketball tickets were alloted to rabid student fans? When the lottery was over and the tickets awarded, Professor Ariely tried to make a market with students who’d won and others who’d lost out. But there was no price point to be found. Students without tickets wouldn’t pay more than $175 for what they’d missed. Students who had tickets wouldn’t take anything less than $2400 for what now felt invaluable. Moral: we overprice what we already have. Application: commentators and Congress folk are stuck (hopeless, but still stuck) with an Iraq war in which they signed (irrationally) for what are now “sunk costs.”

Neither does war remorse necessarily restore rationality, as Dan Ariely observes in our conversation. The Iraq war has set a new “anchor” price for foreign adventure, just as Starbucks re-set the price of your morning coffee. At $1-trillion or more, the Iraq war could make a sequel look like a bargain. Beware also what Ariely calls the “decoy effect.” We all shop by comparision, and tend to go for the less-flawed version in a pair. The “decoy effect” is the reason why Dan Ariely suggests that for success at a singles’ event: bring along a friend who looks like you but is slightly less attractive. It’s the decoy effect that’s being used to suggest that a mere air attack on Iran, without a ground invasion, would be a cinch compared to Iraq.

Dan Ariely’s Predictably Irrational reads to me like a catalog of the Bush follies and how a lazy great nation fell for them. In the book and in our conversation there may also be a rough map of the road back to American Pragmatism and the William James test of policies and ideas: how do they work in practice?

On Leaving Iraq: It turns out that the bigger and more effortful thing that you have done – the more attached you feel to it. Partially it’s regret. If we have invested $400 billion dollars and we will just leave it as it is and we haven’t achieved anything, we will feel like it’s a real waste. So what do we do? We keep on investing more and more in the hope that it will achieve something in the future. We can speculate evolutionarily how much [the attachment process] makes sense. You do want a mechanism that gets us attached to our kids, family, community and ideology, but it turns out it’s a very strong force and even when we adapt a wrong path, we have a very hard time overcoming this. This is the place where you can actually think of what the role of democracy is, reflecting people’s opinions versus people’s best interests. If we have people that are extremely attached to the war in Iraq, and the cord was severed, in two months they would not be attached any more. I don’t think people are able to predict how quickly they would get over this feeling of complete waste of this war. Right now, people think that if we stop [the war], it would have all had been for nothing. And how long would it take them to get used to the fact that it will have all been for nothing? I think it’s much shorter than they would have guessed. It’s a real dilemma about who you’re serving for a politician. The people of the moment who think that they will feel that it’s gone to waste or the people in two months who would be relieved that the war is over.

On Obamania: I’ll tell you another thing that worries me about Obama. We wrote a paper about a year ago on online dating. What we basically found was that when people describe themselves in less precise terms, they are more popular. The reason is that when you are vague, everyone can read into them what they want. You say you like music. It turns out that everyone thinks you like the same music that they like. Vagueness translates into liking. It turns out that the same thing happens with pictures, by the way. You put up pictures that are slightly more fuzzy and people think that you are more attractive. The second thing that we discovered is that people get crushed when they meet for coffee… I think Obama has been relatively vague compared to Hillary. We’ve known her for a very long time and she’s been more clear. People can read into Obama what they want, which is one of his appeals. At the same time, I think that we’ll have coffee with Obama at some point. The only question is when will we have coffee with Obama? The truth is that no human being can stand up to the expectations that the public has for Obama. At some point we will get disappointed. The question is how much and when.

Dan Ariely of Predictably Irrational, in conversation with Chris Lydon, June 9, 2008

Comments

11 thoughts on “Dan Ariely: Confronting Irrationality

  1. This topic reminds me of the phrase ‘buyers remorse’ which is something I rarely have experienced. It also reminds me that I may be living among a large group of fetish-happy people who suffer buyers remorse as a way to attach themselves to the experience of having an experience. It further reminds me of the likelihood of why Chris is grateful to have never had a cup of coffee with me, for imagine his let down on discovering I resemble a dorked-out pelican more than a wise and beautiful parrot (though watching a group of pelicans skim the water’s surface on the hunt is one of the truest things of beauty I’ve ever seen and that alone has made a believer out of me with regards to darwin’s dangerous idea and that a human being is capable of finding beauty in nature’s coarse and subtle ways) … it further reminds me that I won’t be finding any feet of clay with Senator Obama for he’s dude just like me, only with panache and charm and brain power and good looks and reigns to power and a vast reservoir oratorical skill and natural organic leadership ability … other than that, we’re practically twins … I for one welcome this change in our leadership, and regardless of the fetish of Iraq, it’s time we leave this party and find a designated driver to get us home … there are still many ways to negotiate this fetish of the middle east, and I fully expect President Obama to explore them with aplomb and screw-ups alike…

  2. I find his view on Iraq very unconvincing. Sure, we are ‘used’ to wars, but he doesn’t take into account the full suite of behavioural studies. The propensity for war is probably higher following successful wars. Take a lesson from behavioural finance, it was a lot easier to sell someone tech stocks in 1999 than it was in 2001.

  3. I’m with you, ghostofdali. What is up with No Links?

    Perhaps they are all overstressed by graduations or whatever. Enjoy your sabbaticals.

    The rest of us continue to stress our ourselves with jobs that require our attendance, and we don’t have time to read summaries or hunt for other links!

    But at least you try.

  4. I’m with the parrot.

    Obama is bound to disappoint. He can never live up to expectations. I only hope he gets to that place where this will inevitably happen.

  5. Potter, have you ever thought that he just might exceed those expectations you speak of (yours or someone else) – hes he not already?

    If you heard the stump speaches, you heard the pronoun “I” coming from Clinton. “I promise to be a great president for you.”

    The question is will WE live up to expectations, and vote him in, and not tear him down, and back him whole-heartedly in a government — oF The People.

  6. Nother- lest you perhaps misunderstand me, I am thrilled that Obama has gotten to this point. But so many hopes are riding on this man. In addition if he gets the office, and a dearly hope he does, he will have a lot of heavy lifting to do. he will inherit enormous problems and challenges. So I feel that there are a lot of supporters that are expecting too much. I have pulled my own expectations way back to feeling that just being who he is, his sensibility about the world, will be enough of a change.

  7. I just listened to the podcast and was pleased to note that Dan Ariely seems to have designed experiments that quantify the effect of belief on behavior and reality. These experiments seem to provide empirical data (the kind plnelson was always asking to be provided for seemingly unquantifiable assertions. I have written here, over the past 2.5 years that perception is reality and that perception is a function of one’s belief system and that each of us creates reality through the filter of our worldview/belief system despite what consensus and other’s alternative perceptions maintain. The irrationality Ariely finds is an alternate perception created by his belief system and those who agree with his assessment. Those who make irrational choices do not perceive them as irrational unless they are so vested in their choice that even though they realize they may be making an irrational or ill advised choice they rationalize the behavior and proceed against the reasonable options and suffer (or not) the consequences.

    The idea that lack of definition – fuzzy pictures, little information, or blank slate tends to allow one to fill in the missing information with one’s own data from one’s belief system makes perfect sense. Like impressionist paintings our minds fill in the blanks and we see what we create. Obama may be fuzzy or a blank slate as far as his public image and thin paper trail may indicate but he projects the image of someone who is highly intelligent (save the occasional faux pas) and cares about those who are disenfranchised (by projection or fiat.) We have a much sharper picture of McCain who seems confused and ill informed much of the time and whose psyche has not benefitted from the lessons of internment during his Vietnam experience as he still believes in war and caved on the torture question after railing against it. Obama believes in war – just not stupid wars (as I perceive all war as stupid I find this disheartening) but given the choice of The Lesser of 2 Evils I’ll be supporting Obama despite Ariely’s misgivings.

    OCP There is a good article in the May 12 New Yorker about your ilk

    Bird Brain Indeed Keep On Squawkin’

    p.s. Hi Potter

  8. Well stated jazzman, as usual, and thanks for the article link. I did my research on this matter by studying Mister Ed, Arnold the pig, and Francis the talking mule. Great seeing you turn up again jazzman (really enjoyed the Amram comment), as well as, potter, hurley, nother, et al…, and some new voices too …

    As jazzman says: Peace to ALL

  9. I just thought I’d mention that his ideas of waste psychology were spot on. This year, my wife and I decided to try a local Community Supported Agriculture (CSA) subscription. We got a lot more than we bargained for. Each Saturday we got a new grocery bag stuffed full of vegetables, whether we’d finished the one from the previous week or not. We first attempted to avoid waste through Veggie Saturday…where we ate nothing but our CSA vegetables for dinner, to finish them up.

    What ended up working the best for us was to actually rearrange our grocery shopping habits, so we could plan the week’s meals around the veggies we got on Saturday. This has completely changed the way we approach meals, and we’re eating much more healthily as a result.

    I was shocked to hear Mr. Ariely recount our exact experience since January!

  10. Recently at Barns & Noble I went through some pages of Predictably Irrational. I couldn’t figure out what Dan Ariely was talking about. It was “ghostly”. It made me think a bit about nothing. I admit that I briefly considered buying the book. There was something about the title. Who thinks of themselves as predictable? No one. It is always “the other guy”. Who thinks of themselves as irrational? No one etc. The double whammy of the title almost persuaded me into thinking that if I only read this book, I would finally be in possession of the weapons to point at “the other guy”. Then, while listening to the interview I suddenly realized that Ariely is telling me that the sky is blue, and then went on to attempt to reinvent the wheel. Predictably Irrational will momentarily capture our very short attention spans through the inveiglement of tiny “connections” between intentional laziness and freedom, consumerism, and the recycling – albeit not very eloquently – of early 20th century behavioral economics. What will the book reveal about us and our culture? Nothing … with the exception of causing us to resound “oh WOW, that’s cool, look how that works” – in an attempt to bedazzle us with some creative typing.

    On obesity Ariely says “Eat slower”.

    On vegetables Ariely says buy more so that you’ll “Eat more of them”.

    On the Israeli Palestinian conflict Ariely’s wisdom reveals that they “Need a third party” to help them resolve their issues because they are incapable of resolving it themselves. You don’t say. “Third party” … hmm, where have I heard that before?

    Rome or Paris? With or without coffee? Offering something for free as an added incentive? The genius is overflowing.

    “Obama and Hillary and Hillary plus Obama looked like the Rome wit coffee” … “Makes Rome wit coffee looks more attractive”.

    When are we going to have coffee with Obama? Rome with coffee, and when people meet for coffee. That’s a lot ‘a coffee in one interview.

    “Dragged through the trash … the mud, I guess is the expression”, says Ariely. Characteristics – three syllables? Can one say “Money lost under the bridge”? I guess one can – LOL.

    Predictably Irrational will, predictably, disappear from our lives and our vocabulary, hopefully, as soon as possible.

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