Book Review: Predictably Irrational

When it comes to making decisions in our lives, we think we’re in control. We think we’re making smart, rational choices. But are we? From paying for coffee to losing weight, and buying a car to choosing a romantic partner, Author explains how to break through these systematic patterns of thought to make better, more financially sound, decisions. Predictably Irrational is not simply a fascinating read; it has the power to change the way we interact with the world – one small decision at a time. In the current economic crisis it is an invaluable tool that no person should be without.

Not only do we make astonishingly simple mistakes every day, but we make the same type of mistakes. We consistently overpay, underestimate and procrastinate. We fail to understand the profound effects of our emotions on what we want and we overvalue what we already own. Yet these misguided behaviors are neither random nor senseless. They’re systematic and predictable.

For instance in first chapter - “The Cost of Relativity”, the author tells us about the how prices of different commodities are kept relative to each other and keeping a costlier product next to a product which costs less can make the cheaper product look like a bargain and thus help the product sell.

In fourth chapter, Dan talks about the cost of social norms and how to keep the delicate balance between social norms and market norms. He also talks about how measuring every exchange in terms of money can be a big mistake. And why relationships building with clients are really important and helps build goodwill while the same thing can backfire badly and leave a bad reputation in market if not handled properly with lots of analogies and examples about the same.

From a startup perspective this book is immensely useful, whether it comes to pricing your products/services or Marketing them, this book gives you insights you never had and results you never expected to get. This book is medium paced and very sticky which makes it very difficult for a habitat reader to leave it mid-way.

Overall, I loved reading it and will revisit my notes when I notice such irrational behaviors either from myself or from others. Do read if human psychology, behavioral theories, motivation principles, biases etc. are topics that intrigue you. Take your time to read this book; skimming through it may not be effective.

Virtual Ownership

Ownership pervades our lives and in a strange way, shapes many of the things we do. Adam Smith wrote, “Every man and woman lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what a commercial society is properly”. Much of our life story can be told by describing the ebb and flow of our particular possessions – what we get and what we give up.

Since so much of our lives are dedicated to ownership, wouldn’t it be nice to make the best decisions about this? Unfortunately, this is rarely the case. We are mostly fumbling around in the dark. Why - because of three irrational quirks in our human nature. The first quirk is that we fall in love with what we already have. The second quirk is that we focus on what we may lose, rather than what we may gain. The third quirk is that we assume other people will see the transaction from the same perspective as we do.

Ownership also has “peculiarities”. For one, the more work you put into something, the more ownership you begin to feel for it. Pride of ownership is inversely proportional to the ease with which one assembles things. Another peculiarity is that we can begin to feel ownership even before we own something. “Virtual ownership” is one mainspring of the advertising industry. We get a catalog of hiking clothing from Patagonia, see a polyester fleece pullover and we start thinking of it as ours. The trap is set, and we willingly walk in. We become partial owners even before we own anything.

Ownership is not limited to material things. It can also apply to points of view. Once we take ownership of an idea – whether it’s about politics or sports – what do we do? We love it perhaps more than we should. We prize it more than it is worth. And most frequently, we have trouble letting go of it because it can’t stand the idea of its loss. What are we left with then, an Ideology – rigid and unyielding.

There is no known cure for the ills of ownership. As Adam Smith said, it is woven into our lives. But being aware of it might help. Everywhere around us we see the temptation to improve the quality of our lives by buying a larger home, a second car, a lawn mower and so on. But once we change our possessions we have a very hard time going back down. Moving backward to our pre-ownership state is a loss, one that we can’t abide, it’s psychologically painful. 

Other currencies equivalent to Bitcoins

From around $1000 in the beginning of this year, Blockchain based cryptocurrency bitcoin is today nearing $20,000 mark. The boom in Bitcoin value has also helped its rivals surge. Cryptocurrencies like Ethereum, Litecoin and Ripple too have soared to records in the past few weeks. Here are some closest rivals of Bitcoins.

Ethereum – It is one of the hottest rivals of Bitcoins. Launched in the year 2014, it is currently the second most valuable cryptocurrency. Like Bitcoin, it is also a type of Blockchain network. Ethereum is a decentralized platform that runs smart contracts. Applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference.

The Bitcoin and Ethereum Blockchains differ primarily in purpose and capability. While the Bitcoin Blockchain is used to track ownership of the digital currency bitcoin, the Ethereum Blockchain can be used to build decentralized applications. The virtual currency associated with Ethereum is called Ether.

Ripple – It is reportedly considered as logical successor to Bitcoin. It was launched in the year 2012 by former Bitcoin developers and is a startup using Blockchain technology that as per its website connects Banks, payment providers, digital asset exchanges and corporates. It also operates as a payment network called RippleNet. XRP is Ripple cryptocurrency. It has been soaring to record high since Bitcoin jumped. Currently, Ripple XRP is up more than 7,000% from its 0.65% at the beginning of last year.

Litecoin – The digital currency Litecoin too has emerged as a strong rival to Bitcoin, giving tough competition to other cryptocurrency rivals like IOTA and Ripple. Litecoin has surged over 5,700% last year till December 12, whereas Bitcoin had gained 1,550% during the same period. It is a peer to peer cryptocurrency, launched in 2011. Litecoin is very similar to Bitcoin in its technical implementation. The biggest advantages of Litecoin are claimed to be speed and low fees. Litecoin uses Scrypt Algorithm; it reportedly demands memory instead of processor resources. Generating new Litecoin is possible through mining as well.

Zcash – It claims to be the first open, permission-less cryptocurrency that can fully protects the privacy of transactions using zero knowledge cryptography. Like Bitcoin, Zcash is a Blockchain based currency. Launched in October 2016, as per Zcash website, its monetary base too is the same as Bitcoin’s – 21 Million Zcash currency units and is mined over time.

It is a scarce token just like Bitcoin which can be transferred globally and exchanged to/from other Cryptocurrencies or flat currencies via online exchanges, in-person transactions etc. Recently, Zcash became the third digital currency to receive the backing of the Bitcoin Investment Trust and the Ethereum Classic Investment Trust.

Dash – Is an open source peer to peer cryptocurrency. Dash can be used to make instant private payments online or in-store using our secure open source platform hosted by thousands of users around the world. Bitcoins shortcomings led to the development of cryptocurrency Dash. Its three biggest benefits, as per its website, are said to be Instant, Private and Security. It claims to send payment confirmations in less than a second. Two protect user’s financial information by safeguarding their activity history and keeping balances private. Three transactions are claimed to be confirmed by 200 TerraHash of X11 ASIC Computer power and over 4,500 servers hosted around the world.

Monero – It is claimed to be a secure, private and untraceable cryptocurrency. The open source cryptocurrency created in April 2014 has been soaring for the past five weeks with prices more than tripling since early November. Monero Research Labs is also said to be working hard to bring down the network’s transaction fees by as much as 80%. Monero developers are said to be implementation Bulletproofs to bring down transaction sizes on the network.

IOTA – It is another emerging bitcoin rival. It has marked capitalization of Rs 0.75 Lakh crore. IOTA represents a third generation of Blockchain after the development of Bitcoin.

Life Lessons I Learned from Mountains

Over the past few years, I’ve developed a deep love for Mountains. No matter the season or the location, there’s something about towering peaks and deep valleys that inspire me. There is a gravity in mountains which pulls me toward itself. Adventure Travel is an activity that requires a leap of faith, one that pushes you to move out of your comfort zone, knowing that you are giving up on your comfort to try something new, something daring, something challenging, yet fun and adrenalin pumping. An experience that you won’t forget, that will change you in a way or another without you even notice it.

Trekking in the mountains may look fun, but it is not for the faint of heart. It takes a lot of determination and willpower to complete a hike and reach the destination and sometimes, the descent is an even more challenging journey that one has to face. But, at the end of day, you are going to realize that it is the challenges and the hardships that will make you stronger as a hiker and as a person. There are many things one can learn from the mountains that individual can apply in their own life.

Dream Big – One should make great plans for future. It is said modesty is a virtue. I believe modesty is not a virtue when it comes to self-assessment and goal setting. There is no limit to what one can accomplish in life if one dreams big, stay committed to success and work hard.

Avoid Naysayers – There will be people who will tell you that you can’t accomplish your goals. It’s too hard”, “You set your sights too high” “and that’s not possible”. Never allow yourself to be fenced in by the doubts or expectations of others. Sometimes your worst naysayer is yourself. I reach a point where I feel overwhelmed by the difficulty of the task and I want to give up and try another time. You too will hit those hard patches during your life journey and will think about giving up on your dream. Banish those thoughts from your mind and stay the course. Surround yourself with people who are better than you.

Set Goals – In order to accomplish great things in life, one need a game plan. With the help of others, create that game plan. Sometimes it is best to focus just on the short-term goals so you are not overwhelmed with the enormity of the task. Break list of task for the year into smaller groups of things to accomplish each month. Always be motivated.

Work Hard – Anything is possible if you work hard and are mentally committed to success. This requires short-term sacrifice for long-term gain. If you work hard now and sacrifice some fun in the short term, you will enjoy a lifetime of happiness and satisfaction.

Positive Attitude – Mental preparation is far more important than Physical preparation. An important part of mental preparation is to visualize success. Always do best to make experience less painful and more pleasant with a smile and few words of encouragement. In a world full of vague cynics and sourpuss, an infectious positive approach can boost the morale and lift up the disheartened spirits of the people around you.

Learn from Mistakes – One will experience setbacks, disappointments and failures. When that happens, pick yourself up, dust yourself off, figure out what went wrong, make the necessary adjustments and get on with the journey.

Trust – Trust in yourself and your ability to succeed. Trust in others, for example, your family, friends, teachers, pastors and teammates. Most important of all, place your full trust in the Lord.

Enjoy the Journey and always give Thanks – Savor the positive experiences on your life journey. Find the best in every situation and hold on to those great memories. Always remember to thank the people who have supported and helped you realize your dream. Most of all, thank the Lord who loves you the most and keeps you solidly focused on the path to happiness and success.

Gratitude and Kindness – It has been truly said that every true success is a mankind joint venture. Live by those words. Help others, just as you have been helped. The smallest act of kindness can set in motion events that transform lives and benefit society. Do your part to lift up those in need and help them reach their full potential. Your life will be enriched by random acts of kindness.

Value of Teamwork – You won’t achieve your goal if you don’t work together, and you won’t have a successful project or product launch if somebody in your team messes up.

Time and Resource Management – Time is precious. Everyone’s day has 24 hours. No more and no less. So how you tackle those 24 hours can make the difference between a wasted day and a day you can be proud of. Pack your stuff and manage them properly. Avoid materialistic things which are not required. Maintain cleanliness and share stuff within team.

Stress Management - Stress is quickly becoming one of the biggest health issues in the world today. Going to the mountains is a meditative and spiritual experience, a true break from the daily grind and monotonous worry.

Patience - Mountains have taught me patience. Keep a calm, clear head and stay focused on what is important. Only people who can wait through this difficult period potentially can continue the journey and reach the top.

When the task is complete and you got the reward move on to the next task. Realize how far you’ve come and how much you’ve accomplished. Revel in that success.