Book Summary – Predictably irrational

Brain understands value in terms of relativity

  • we tend to compare things with one another
  • we also only focus on comparing things that can be compared while unconsciously avoiding those that are hard to compare
  • need to use a decoy to ease the comparison process
  • think in terms of absolute numbers not percentages

Arbitrage coherence

  • the initial price maybe largely arbitrary
  • once the price is established the amount we are willing to pay is relative to the initial price

Market norms versus social norms

  • social norms takes longer to build
  • it is easier for market norms to displace social norms
  • once displaced it is hard to re-establish social norms
  • the notion of money/price displaces social norms
  • don’t mix the two norms
  • exchanges involving physical effort helps maintains social norms


  • Its easier to fight temptation before it arises than suppressing it when it has occurred
  • people are wrong about their predicted behavior when aroused by a large margin


  • procrastination is the giving up of our long-term goals or immediate gratification
  • have person commit up front to a preferred path of action
  • bundling services helps reduce need to think

Schedules of reinforcement

  • variable schedules are not effective and reinforcing behavior
  • America’s top killer is our inability to make smart choices – 50% of folks will make lifestyle decision that kill us earlier

Ownership bias

  • if you own something you are more likely to value it more highly than if you had no prior emotional attachment
  • you tend to be more optimistic of the things you are doing
  • always be aware of base survival rate within a sample population
  • we tend to keep options we don’t need open even when it costs us more in the long run
  • too costly a strategy when there are too many available options in the environment
  • consciously close doors


  • changes our actual experience of the item
  • adding a semi exotic ingredient while not necessarily changing the nature of the dish helps us enjoy it more
  • stereotypes – helps reduce caloric need for brain to understand the full picture
  • approaching a situation with no expectation helps seeing the true reality of things


  • Proactively address complains

Character is contextual

  • how we behave is largely a function of the signals we are getting from the environment
  • profession take a oath at the start of their career
  • cheating is easier one step removed from cash
  • individualistic culture versus socialistic culture

External References

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