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Synopsis of Predictably Irrational: The Hidden Forces That Shape Our Decisions

By Dan Ariely

Chapter 1: Relativity

  • Look for decoy choices
  • People usually pick the middle choice.
  • We need to compare choices to others
  • Given 3 choices where 2 are similar, we cannot consider the 3rd choice and instead we pick the better of the 2 like choices
  • CEO salaries: 1976 - 36x the average worker. 1993 - 131x the average worker. Regulation was enacted to publish CEO salaries. Now, CEOs make 369x the average worker. Shame didn't occur, instead, envy did.
  • Example: A pen costs $25, it is a 15-minute drive to a store where it is $18 so we make the drive. Similarly, a suit costs $455, it is a 15-minute drive to a store where it is $448. Either way is a 15-minute drive to save $7, yet we would only do it relative to the smaller cost.
  • Lesson: the more we have, the more we want. Break the cycle of relativity!

A good summary can be found at http://www.todaysten.com/2009/01/book-summary-predictably-irrational.html.