The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home by Dan Ariely

The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home by Dan Ariely
My rating: 3 of 5 stars

This books, as the name indicates, tries to highlight the flip side of irrationality.

Some of the observations are as under.

High bonuses do not necessarily translate in better performance. When the bonus goes beyond a point the apprehension to perform hinders the performance of the person and they end up delivering less than they could have, if the bonus had been nominal. Although irrational, it probably make sense to temper the bonus offered. Besides the money is not the only driver to performance. Other factors like how much the person enjoys the work, the completion of the tasks and seeing their output being useful to the organization or others are other motivating factors.

People value their creation more than anybody else's, however mediocre the outcome may be. This is called the IKEA effect. The corollary of this is the "Not-Invented-Here" bias. People tend to reinvent the wheel or continue to use inefficient tools and processes just because they happen to have been invented by them or in the organization. A classic example that is quoted is that of Thomas Edison who failed to see the value in the Alternating Current invented by Tesla and continued to blow the trumpet of Direct Current. It is said he even went to the extent of killing animals using AC to prove his point.

Fear of revenge is a very big deterrent. One way to reduce the reduce the chances of revenge and/or to reduce the severity of revenge is to apologize unconditionally. An example is that if Jefferey Katzenberg who left Disney in a huff and went on to establish Dreamworks SKG and produced very successful films like Shrek and extracted further revenge by parodying his boss from Disney, Micheal Eisner in those films.

Humans are extremely adaptable. From our eyes adjusting to variations in light to our mind getting adjusted to a loss or tempering after a big success. Humans tend to bounce back normalcy. It is only a matter of time. This is further strengthened by the fact that people who have endured pain which has benefited them (like removal of bandages from wound) have a better endurance than ones who have not endured much pain.

Pleasure of pain if interrupted stretches longer. So it makes a lot of sense to finish a painful task than taking breaks and taking breaks in a pleasurable task.

People show more empathy and emotion towards people who they are close to or relate to or have something in common than to others. Individual appeal (a cancer patient or a child suffering from a congenital problem) draws more attention, sympathy, empathy and more grants than a mass appeal (refugees in Rwanda or tsunami victims in Asia). Global warming does not make people change their way because they are effected; there is no dramatic effect; the effect is not immediate; and we feel as an individual we will have no significant effect (this is called the drop in the ocean effect).

We get emotional and make decisions under these circumstances and act. Later when encountered with the same or a similar situation we tend to act the same way. This is because we remember the action, but not the emotion under which we acted.

A good follow up read.

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Predictably Irrational by Dan Ariely

Predictably Irrational: The Hidden Forces That Shape Our Decisions by Dan Ariely
My rating: 4 of 5 stars

It is hard to accept that we humans are irrational. Most of us pride our rationality in the decisions that we take. Most of our theories are also based on the fact that humans are rational.

In the book, the author, debunks this "myth". The author through various examples proves that we are actually irrational in many scenarios and predictably so. It give one goosebumps to read the examples that the author quotes and most should be able to relate to the scenarios presented.

One key message that the author gives in the book is that we are all suckers for something free. We lose our rationality when we see something coming for free. We end up buying something that we do not need.

The second point is that although all of us consider ourselves to be upright and honest, it is true only to a certain extent. Most of us tend to cheat when it does not involve stealing cash. Some examples that the author quotes is taking stationery from the office for personal use, or using official mobile, phone for personal calls. Using official vehicle for personal travel. Even claiming medical bills, cooked up with the help of a medical store (specifically in India) or claiming travel more than one actually spent. All of this is justified in one form or the other by us.

The third point that the author makes is that we cannot compare the value of items which do not share common qualities. E.g. when deciding on a vacation, the only common point is the hotel. The vistas and experience that one would get in the different locations is hard to compare and evaluate for our minds. So we end up taking a vacation which is more driven by the freebies that come with the hotel rather than what we will experience at the location.

The fourth point is that we succumb to buying things which have scarcity. We end up buying things which are scarce or are expected to go scarce even though we may have no need for it.

The fifth observation is that there are many things which we may do as a favour, but will avoid if we are paid for it. When our neighbour asks for our help to move his furniture we will help him. But if she offers us money for doing the same, we may refuse or at least refuse the money. The expectation is that they will repay us in kind sometime in the future.

The sixth observation is that we lose control of our mind when are emotionally charged. The emotion could be anger, sadness, frustration, or sexual arousal. Our rationality goes out of the window if we take decisions under these conditions. The phrase "blind anger" is justified.

The seventh observation is that once we possess an item we attribute a lot of attractive characteristics to it and tend to overvalue it. Even if we do not actually own but are set on owning something we tend to overvalue it. As a result when we sell anything we tend to expect much more than its worth as a seller and as buyer we tend to undervalue as we do not own it as yet. This is the constant conflict that the buyers and sellers face.

The eight point that the author makes is that an "a priori" knowledge will bias our choices.

Another shocking observation is that people tend to "feel cured" if they pay a higher price for the treatment or medicine as compared to if they pay less for the same treatment or medicine.

All in all the author concludes that we are not as rational as we think ourselves to be.

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