Sean Eby

The relatively new book by Dan Ariely called Predictably Irrational looks like a pretty good read. I have always had a fascination and curiosity with trying to understand how we really think and make decisions. There have been so many times in my own life that I (or observing others) that I have seen strange decision-making. The kind of thing where you scratch your head wondering how someone could reach such an utterly stupid decision. Sometimes it really is because someone is just dumb but that's more rare than you would think. More often, it is a circumstantial fact that you may not be aware of which drove the decision. Other times, it could be one of the traps described in Ariely's book.

Those traps are what interest me in seeing if decisions can really be made better if you become self-aware of your own natural human tendencies to be susceptible to them. Herding is a decent example. From the book outline:

• Herding: Assuming that something is good (or bad) on the basis of other people's previous behavior

  • Example: People wanting to go to a restaurant where people are waiting outside

  • Example: Going back to Starbucks because you recall enjoying yourself on your previous visit

    • At that point, you no longer ask yourself if you'd be better off with the cheaper coffee at Dunkin Donuts, or with the free coffee at your office

I like this one because it is something we can all identify with. In the first example, we somehow assume that a restaurant with a line outside "must be good." Who can blame us? I mean, clearly if that many people are waiting and the line extends outside, that restaurant must be good, right? Therein lies the predictably irrational behavior because while 8 times out of 10 that may be true, you're wrong 20% of the time. The area the restaurant is in might just be overly busy (nearby sports event at a stadium, maybe?). Perhaps the restaurant is physically just small and it is a Friday or Saturday evening (even if it is not a great restaurant, they're bound to fill up some tables if they don't have many to fill?). Maybe the restaurant actually has slow service (and bad food)? All of these are explanations of why just having a line outside the restaurant doesn't necessarily make it a great restaurant. Therein lies the question: Does noticing our tendency to make these assumptions help us make better decisions? I mean, if you know that the line outside the restaurant is not because it is good but because it is small (and not so good) make you a better decision-maker? In this case, a better decision-maker is one who is able to choose/find good restaurants. Obviously, the solution here is to locate additional facts about the restaurant before going there, in addition to the fact that it may (or may not) have long lines waiting to get in.

Predictably Irrational paints many examples of these situations and I reflect on my own personal experience when reading about these various "irrational" behaviors because I have been guilty of them myself. I just wonder if becoming more self-aware of them ahead of time would make me a markedly better decision-maker.