We love to think that, for the most part, we have our behavior under control–that we know what we need and want and we’re educated and rational enough to avoid obvious blunders. But who hasn’t made poor decisions that were, in hindsight, pretty blatant? Buying that car we couldn’t really afford? Making that investment that really was too good to be true?
Predictably Irrational gives us fascinating explanations for these “chaotic” elements of human behavior, and shows how we’re subtly influenced to act in, well, predictably irrational ways.
For instance, Williams-Sonoma’s first bread machines didn’t sell well. The solution? Introduce a “deluxe” version that was 50% more expensive, thus making the original model appear to be a bargain. It worked like gangbusters–bread machine sales shot out the roof.
One study showed that when people were contemplating the purchase of a $25 pen, the majority would drive to another store about 15 minutes away to save $7. When contemplating the purchase of a $455 suit, however, the majority of subjects wouldn’t make the same drive for the same savings.
Similar to the Williams-Sonoma story is the one on the black pearl market, which was non-existent before the 1970s. When black pearls were first offered for sale, nobody wanted them. When Harry Winston placed them in the window of his 5th Avenue store with an outrageous price tag and ran full-page ads in glossy magazines featuring the pearls next to diamonds, demand steadily grew until they were finally considered precious.
What social, economic, and psychological factors mold our behaviors like this? That’s the subject of this book.
I particularly liked the chapters on procrastination and self-control and why options distract us from our primary goals. They offer very practical insights in how we can better “make” ourselves do what we know we should and how we can consciously “close doors” in our life that lure us off course.
Like Influence, if you’re involved in any form of sales and marketing, I think this book is a must read. You’ll find a wealth of economic examples that are easily applied to any business endeavor. If you’re not a sales or marketing person, I think you’ll still find the book entertaining and enlightening in terms of how you’re “wired” to behave in irrational ways, and how you can combat these tendencies.