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.