There have been a lot of books written since Daniel Kahneman and Amos Tversky’s Nobel Prize winning work on the limits of human decision-making, the problems such drawbacks cause, and the steps that people can take to overcome such limits. Max Bazerman’s Judgment in Managerial Decision Making is still among the best, and although it is textbook-like, I find it engaging and useful. But there is a new champ in this space. I am just about done with Dan Ariely’s Predictably Irrational: Hidden Forces The Shape Our Decisions. Ariely not leads us through one fascinating study after another — such as research that shows why a 1 cent aspirin won’t get rid of a headache but a 50 cent aspirin will and a host of other studies that show why we waste money, underestimate risks, and procrastinate. He also shows throughout the book how to overcome or avoid these biases, and for me, the real clincher is that his writing style and charming personality kept me turning pages quickly and smiling throughout. He takes study after study and translates them in an engaging manner, but never distorts the message. This is one of those books that is on par with the Heath Brothers Made to Stick, Robert Cialdini’s Influence, and Malcolm Gladwell’s Tipping Point. If you want to learn about behavioral economics, Predictably Irrational is the best place I know to start — although Bazerman’s book is a more useful reference it is more systematic and comprehensive (and it is well-written).
P.S. A lot of people seem to have a similar opinion of Ariely’s new book — it is currently #13 overall at Amazon.
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