Book 4: Predictably Irrational

 Why do our headaches persist after taking a one-cent aspirin but disappear when we take a 50-cent aspirin?
 Why does recalling the Ten Commandments reduce our tendency to lie, even when we couldn't possibly be caught?
 Why do we splurge on a lavish meal but cut coupons to save twenty-five cents on a can of soup?
 Why do we go back for second helpings at the unlimited buffet, even when our stomachs are already full?
 And how did we ever start spending $4.15 on a cup of coffee when, just a few years ago, we used to pay less than a dollar?

These are some examples taken from the book of Dan Ariely “Predictably Irrational” and 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? This questions keep us busy thinking was it a correct decision from my side?

In the book we try to understand how the author refutes the common assumption that we behave in fundamentally rational ways. Blending everyday experience with groundbreaking research, it explains how expectations, emotions, social norms, and other invisible, seemingly illogical forces skew our reasoning abilities.

Not only do we make childish simple mistakes every day, but we make the same types of mistakes, continuously . We consistently overpay, underestimate, and procrastinate by replacing high priority actions with tasks of low priority actions. We fail to understand the profound effects of our emotions on what we want, and we overvalue what we already own. And these misguided behaviours are neither random nor senseless, they're systematic and predictable—making us predictably irrational.

To sum up, before taking a decision we have to think clear and rational trying not to be influenced by some factors such as: emotional distress, cognitive deficiency or even inadequate reasoning which may lead to our irrational behaviour.

Anri

Book 2: In Pursuit of Elegance

In Pursuit of Elegance was a very interesting book, full of information that are very interesting to share with others who seek out knowledge and interesting facts. The examples the author uses throughout the work are fascinating, starting from Jackson Pollock's masterpieces to a crowded intersection with no lights, no lanes, and no accidents, and then you start thinking, is it really true?

May can be quite repetitive at times. In his efforts to stress the importance of elegance, and the mantra of "less is more", author uses far more words than necessary, even when talking about the importance of brevity. Also attempts to connect with the readers by striking a casual tone and delving into his personal life. Additionally, we are able to see also some anecdotes that brings in from his own life sometimes even seems a bit of different. As an example, if your child asks you for four pieces of french toast, cutting one piece into four isn't an elegant solution or it's a lie.

Furthermore, Matt Ray never quite finishes his argument, in that he stops just short of telling us how we can be more elegant people, or make more elegant decisions, or implement elegance in any form in our lives. The author leaves us with some definite sentences like "think outside the box" and "less is more", and doesn’t provide an answer. He provides us with a lot of examples of elegance, but never lets us implement it ourselves. He never even lets us know how to learn how to be more elegant.

And like in the book of Changing Minds of Howard Gardner we have to come up with our own theory how to make it work smoothly.

To close, I wanted to share a phrase from Daniel H. Pink author of A Whole New Mind and The Adventures of Johnny Bunko: “In Pursuit of Elegance is a fascinating intellectual romp that will change the way you look at your surroundings. As he takes readers from Jackson Pollock paintings to Dutch intersections to the secret menu at In-N-Out Burger, Matt May reveals the hidden elements beneath genuine innovation. This book is surprising, compelling, and, yes, extremely elegant.”

And maybe he is right...


Br, Anri

Book 1: Changing Minds

The book “Changing Minds” of Howard Gardner is a very interesting and enjoyable book. This quick, enjoyable research make you start thinking on how to convince others (even yourself) to adopt a different viewpoint in various settings, including business. And the good point, is that sometimes changing mind comes easily but what we have seen is that minds are exceedingly hard to change. Unfortunately, the book doesn't provide any specific tools or techniques for applying his model for changing minds. Nevertheless, the author, Gardner, present a model and reminder that one must keep both mind and ears open to effectively change others. And in order to change someone’s mind you always have to start by developing an ability to influence people’s thinking and gain their trust towards you.

And here as an example I wanted to talk about “resonance”, when it’s two people talking, resonance is the key factor. There is no general recipe for resonance; you have to know your audience well enough to know what’s going to resonate with this person on this day. If you want to bring about a change in the CEO, you have to know him or her very well. You need to do your homework before you get into that one-on-one situation. You need to know if this person is a story person, a theory person, an emotion person or a paranoid person. You need to know what are the sets of levers that work with him. And to the extent that it’s a very high-stakes performance? This is your two minutes, you have to make the case now or never? You’ve got to be monitoring very carefully.

Some chances comes only on time in your life and you have to be prepared to change the mind of the person sitting on the other part of the table.

Anri

Predictably Irrational

The Hidden Forces that Shape Our Decisions

I, indeed, or people around do a lot of irrational actions, It seems as a way to support our personal equalibrium even knowing that we shall behave the opposite way. Familiar, isn’t it?

A very interesting idea of explaining the differencies between rationality and irrationality in co-ordinates which was given by Gregory Reinin, Russian mathematician:

Here graphically, without any extra explanations we may understand the differences: rationality is logical and clearly oriented, irrationality is intuitive, with orientation unclear, result unpredictable. The co-ordinates may be applied in describing our behaviors as well.

I don’t think that book will change my behavior and I would try to act more rational, especially after Dan Ariely mentioned so many stories where irrationality had leaded to positive and exceptional results, gaining competitive advantages and qualitative indexes for the organizations, based on irrational behaviors of the characters. But at the end we should keep in our minds, Too much water drowns the miller.

Sincerely,

Tatiana

Book2. In Pursuit of Elegance: Why the Best Ideas Have Something Missing (Matthew E. May)

Elegance is the harmony that we need in everyday life to feel satisfied and in the ancient greek world, to refer to harmony it is used the term symmetry, seen like numerical proporstion between spatial elements.

It is later on that the concept of symmetry as a proportion gets the meaning referring to the regulation and disposition of the same elements in space.

Seduction, subtraction, symmetry and sustainability are the keys of elegance in « In Pursuit of Elegance: Why the Best Ideas Have Something Missing », written by Matthew E. May.

In his theory the brain searches for patterns and balance and once they are found is completly satisfied.

"Symmetry" it is needed because it is the best way to find solutions about structures and order ; "seduction" it is needed because makes the solution more creative ;"subtraction" it is potentially usefull for all that concerns solving economic problems and
"sustainability" is the only way to have something that will last in time and will be repeatable.
Given this, to have the ability to use seduction, subtraction, symmetry and sustainability, in the correct way, it is the best way to achieve objectives, because it helps our brain to get what is needed in order to be satisfied.

So it is said that trying to achieve elegant solution is done by removing things, rather than to had them, so that the brain, searching for the perfection given by simmetry, is captured.

That is why a game like sudoku is so adictive, because it gives satisfaction to fill all the spaces and make it balanced and precise.

So if something that is not really essential is removed, this can take the attention, making the person focus on what is remaining to find the best solution to complete the scene, and what was there will then stay fixed in mind,

This can be applied to all sort of life process.

May examines different fields ranging from physics and marketing to design and popular culture.

Thinking of art many artist use a method based on calculating the proportions to give harmony and balance to their work.

Kandinsky used to say that all forms, natural or artificial as they may bee, are the manifestation of a significant reality, tension between forces, and that to try to understand them it is necessaire to study theyr invisible background.

As Leni Reifenstahl said... « I am fascinated by what is beautiful, strong, healthy, what is living. I seek harmony »

Predictably Irrational

Let me tell one interesting story from Turkey.

Gripin is an old medicine company which was established in 1930 in Turkey and it became known as “the cure for all ills”. Actually I do not know it works or not but when I was child it was easy to find everywhere.

It is a bit different from other medicines because it is really big pill. While drinking gripin, you are afraid because of sticking in your throat. Sometimes later, they decide to change the size of the medicine and they started to produce a normal size pill. You cannot believe the result. Sales began to decrease rapidly because people thought that ‘how this small pill cure their ill’ and they stopped to buy this medicine. After that they gave up and decided to continue with big size.

WHY? People compared the cure power of a medicine with the size of pills. If the pill is big, it can cure; if the pill is small, it cannot cure!

Sometimes psychological effect is bigger than real effect.

Burcin

Book 1.Changing Minds: The Art and Science of Changing Our Own and Other People's Minds(Howard Gardner)

Is it such a deal being able to change mind or to make someone else change is mind ?

It is probably a big deal if it is about issues important in every day lifes such as politics, science, business and art.

Decision-making process and changing peoples minds involves so many peculiarity of each individual, and each decision that an individual makes can be essential in moving on or stillness of events, and Howard Gardner, in his book « Changing minds » identifies some kies elements, such as real world events, reason, research around this issue.

As Gardner says politicians, artists, writers, musicians and teachers can change people's minds, but, in my opinion, this only to the point were outside factors are not so strong.

If we take as an example a rôle play based on strategy, the most frustating aspect is that no one thinks of being manipulated and keeps is mind concentrated on manipulating the others, but in the end the expectations are dissapointing because each individual choose is own way.

But the point is that each individual, in the end, decides basing is value on so many different aspects, that go from waking up in the morning in a good moon, to having slipped on a banana skin getting out of the metro station.

The only real way of making people move towards what we want. is to give them the elements to judge that what we are saying, what we are proposing is worth the choice they are making.

If we get the example of teachers and we use the word to mowl and not to educate, we would have the sense between trying to make people change their mind and decide what they really want.

Each person has is own concept, that have been built up throw experience that each of us makes since the first moments of life, this is essential in the way we take decision and also in the way we change our minds or we don't.

In « Changing minds », it is interesting to see the way that Gardner analyses President Bush, Margaret Thatcher, Tony Blair, and South Africa's Nelson Mandela, getting to the conclusion that all of them have some peculiar skills that are capable to make people change their minds towards them. Gardner suggest that this people are able to talk in a different way of all the others, a way that touches people that are listening.

It is interesting to see how some people, mostly known to be very charismatic, are capable of moving masses towards them, just by the way they are, behave and act. Charisma, from the greek χαρισμα, meaning "favor given" or "gift of grace", is the charm that some people have and that brings the others a sense of devotion.

Having good comunication skills is surely an open door to people that try to make other people change their mind, starting from the body language and going to a good and energic hand shake, but this are only one of the factors in the game.

Gardners's book is very analytical, but in the end doesn't really give an answer to the question of being able or not to change the mind, because it is evident that to many factors enter in the question and each of this take more and more variables to the question.

Best way to be someone that doesn't change is mind easily is to have a very well formed coscience that can bring the individual to think before acting.

Book 3: The Spirit Level

The book from Richard Wilkinson and Kate Pickett was a very interesting and brought in front of us one more time the picture of the real world and reminded us of a big question "Why more equal societies almost always do better?"

Of course was very interesting to see in general the Nordic Countries and Japan to have such a good equal societies leading to a strong commune and unity. While I was reading some parts of the book to my mind came a story in Japan:

A businessman, lost everything in a fire in Japan yesterday. Today he has placed a signboard: "Everything burnt but luckily faith & confidence undamaged....... BUSINESS starts MONDAY... !!!

When I firstly read this story I was surprised how the people in Japan got raised up with such mentality. Unfortunately on the black 11th of March Japan was stroked from huge tsunami and earthquake but was very impressing and breath taking was the picture afterwards where the population was unified and how they were supporting each other. All the country became one body, for the sake of the community everybody was ready to sacrifice him/herself. As you may have read today there are around 50 workers working in Fukushima and their body have been contaminated and they all gave their last greetings to their family, they sacrificed theirselves for the country. And for sure this gives hope and a better future to the country. And for sure after some months Japan will raise up even strongly because there is a unity and equality in the country.

I think that all the world have to learn from Japan.

Regards
Anri

Book 4: Predictably Irrational

Now this is a funny/brilliant book and the topic it deals with very very interesting. Last night I was reading part of the book and it was like opening a window that has always been in the wall but I just never bothered to open and the day I opened it the panorama was impressive.

I apologies for the emotional sentence but I was really impressed. It came in mind nanny times where such irrationality was openly noticed in everyday life. It is also clinically used in patients that believe are ill but the analyses show no illness at all. The doctors use these "dummy" pills which are candy's that look like medicines and the patients simply get better.

It is also what defines us as humans because irrationality makes the everyday better and the most boring situations to be remembered as we ( me or the other persons) will always make some irrational move.

Regards

Book 3: The Spirit Level

The original Book refers to countries like the USA or Izrael where it is logical that the few educated and well prepared ones rule and guide the crowds.

I want to refer to eastern countries where the number of the well educated people are far higher than in the states the book refers to. The logic makes you believe that these countries should be better in terms of social and economical parameters but the reality is totally different.

So we all have to follow the example of such rich and powerful countries ?

I do not believe we can and i my opinion we should not. Education should not be forgotten and the ways should also be different.

I would like to add more but I am afraid it may make the logical of what I just said vanish so:

The end

Book 3: The Spirit Level

The charts of “The Spirit Level” show some evidences which were mostly not unexpected, at least for me, except some, such as Israel having the least educational scores. They show the benefits of a smaller gap between rich and poor people, of course when the gap is big, so we have very poor people and very rich ones, there are a lot of troubles in every case. I think that this is related directly to the education of the people, so poor people do not have the possibilities to get a good education and this leads to many problems such that high homicides’ rate, low teenage birthrate, high child conflict rate, high health and social problems etc.

On the other hand we have the richest people where with these results I can state my idea that money spoils, indulges people. It makes people abuse with everything around, starting with eating till the limits of politeness/rudeness. They attend the most expensive private universities where you can easily buy the diplomas; they can afford the usage of drugs, which implies the health and social problems increase. And of course they don’t care about recycling and innovation because they think that money buys everything… Now in Albania, I believe that this gap is not very large and I hope and wish that the medium level class will be dominant for a better life for everyone …

Predictably Irrational

Actually I am very suprised when I saw the result of the people that they prefer.Actually before I had this course I didn't notice that most of the people choose the same thing like me.We can predict what many can choice but when the choices change.

In supermarket,really I was wondering why markets keep the price like 5.99, or 9.99.We feel like they are cheap but there is no big defference with 6 or 10,just psychology.This taught me that we don't always follow our logic we follow our senses.When the criteria are strickly definite we use our logic more.If they are not definite,we follow our senses in my opinion.The answers predictable but senses and the logic changes the decision with respect to the clearness of the choices.

Ismail KIRCI

The Spirit Level: Why More Equal Societies Almost Always Do Better?

I couldn’t become affectionate enough to the book ergo I didn’t read it (let’s put the word so far here just in case :)).

What I read though was the reviews done by some journalists at “The Sunday Times” and “The Guardian” and to my utter amazement I couldn’t find the answer to the big question in any of those.

The scatter-graphs resembled Y= aX+b arrows with US & UK as tip and Japan & the Scandinavian countries as tail, replicated for different values of a & b ;-) but I have to admit they were interesting up to a certain point.

Apart from the descriptive nature of these resources (the reviews and the graphs), I couldn’t notice the Why-Because tandem anywhere. That worried me by the way because that was the reason I was going to “buy the ticket” in first place, which fortunately didn’t do (so far) :).

However there was something that really triggered my mind and that is the issue of anxiety since it has direct effects on many analyzed criteria in the book like: suicide rates, crime rates, obesity, drug addiction, heart disease etc.

Why anxiety is more prevalent in polarized societies? I think it is closely related to the issue of Meritocracy.

To paraphrase Alain de Botton: “Meritocracy is presumed to be a positive thing in the sense that whoever deserves to be at the top, will get at the top no matter what. If someone has the ideas, skill, talent, energy and determinacy to jump at the top nothing should hold him/her back. However If somebody complies with this, he/she by implication reconciles with the idea that whoever deserves to get to the bottom should be at the bottom and stay there.”

Simply put your position in life doesn’t seem to be accidental but merited and deserved instead and this does nothing but make failure seem much more crushing.

Now since most of the societies nowadays are meritocratic at certain extents and since everything strongly depends on relativity, I think I am allowed to deduce that: “The more polarized a society is, the more crushing a failure seems to be hence creating more anxiety among individuals”.

BR
S.K.

The Pursuit of Elegance

Elegance is such a used word but not always in the right position and in the right way.

Trying to do things in such a way that not only the result should be important is the best approach to elegance. Simple is elegant as simple is also difficult. By nature all the people tend to try make things more complicated that they are. By this I do not mean that all people tend to be perfectionists but that by nature all the people are a little disorganized and lazy.

Keeping things simple is really complicated and a luxury that not everyone can afford in modern life but those who try by making things also spicy they are in the good path of being Classy people.

Taking things to completion but " leaving the sentence without a dot at the end " is the elegant way of spicing and making things interesting and everlasting.

The road not the end but also the end without the finalization.

Regards

Predictably Irrational

Among the umpteen interesting points this book introduces, there are two of them which I want to put the emphasis on:

1- Visual vs. Cognitive mistakes

Vision is by far the best and the most frequent thing we do. The part of our brains dedicated to vision is bigger than any other part dedicated to anything else. And if we repeatedly make mistakes in vision, what’s the chance that we don’t make even more mistakes in something we’re not as good at, like financial decision making for instance? And the funny thing is that while in vision you can demonstrate mistakes very easily, in cognitive decisions it is really hard to persuade people they’re wrong.

2- Standard Economics vs. Behavioral Economics

In a survey about organ donation the asked question was:
A) Check the box below if you want to participate in organ donor program
In this case rate of participation was very low --> People didn’t check and didn’t join

In a second survey they changed the question a bit:
B) Check the box below if you don’t want to participate in organ donor program
And in this case rate of participation was very high --> People didn’t check but in this case they joined.

Now Standard Economic Theory explains that the cost of lifting the pencil and checking is higher than the possible benefit of the decision that’s why people don’t check.
Whereas Behavioral Economic theory says that in such cases people are left in dilemma and don’t know what to do. And because of that they just pick whatever was already chosen for them.

Which one of them is right?
I don’t know. If anybody does please tell me!

Irrationally Yours
S.K.

Book 4: Predictably Irrational

This book was out of my expectations, meaning that it was explaining the behavior of people totally different than me. It was really strange. I felt very rational and I understood that it is not good for business being rational since most of the people in the world are irrational... that economics may be would make more sense if it were based on how most of the people actually behave. It made me read a lot about it, I saw that classical economics is the story of how humans are rational beings who calmly weigh up the pros and cons of each economic situation before making a logical decision. This was the way I looked at the world till now, but it seems that unfortunately classical economics, although interesting, turns out to have some serious problems… This book introduced me to the so called behavioral economics. Behavioral economists believe that people make all kinds of irrational decisions, and it tries to analyze them… “Behavioral economics dispenses with the conventional presumption that people are rational actors and views them as IRrational REactors.”

The chapter on pills reminded me of my mother who always wanted me to bring some analgesic (pain pills) from Turkey pretending to be better, more effective. On the other side, I take myself medicine costing just 50 leke, against disturbance during some long trips by car, and find them very effective, while some of my friends use some expensive ones… The results ??? SAME

The book tells about a study that students who paid list price for cold medications reported better medical outcomes than those who bought discount (but clinically identical) drugs. The effect declined when they were asked to stop and reflect on the relationship between price and quality. They were far less likely to assume that discounted ones were less effective.

I would like to share another experiment: Beer ordering. A group of 5 is offered a choice of 5 different beers.

· When people order out loud, and in sequence, they order more types of beer per table, opting for variety

· Those who made their choices out loud were not as happy with their selections than those who made their choices privately, except the first person that was just as happy as private choosers

· Why did this occur? "People are sometimes willing to sacrifice the pleasure they get from an experience in order to project a certain image to others...People, particularly those with a high need for uniqueness, may sacrifice personal utility in order to gain reputational utility."

o In Hong Kong, in a culture that values conformity rather than uniqueness, the similar but opposite effect occurred. People ordered the same order as the people ordering before them. They were still unhappy, but they made their choice to avoid uniqueness, rather than to seek it out…

I think that, mostly, it happens the same as in Hong Kong even in Albania… may be drinking the same drink makes you more friendly to the group…

Coming to the “FREE” or “ZERO” price effect, I believe that generally humans live with fear. As we have seen in “SWAY” the explanation of loss-aversion is typical case in this situation; when an item is free, there is NO VISIBLE possibility of LOSS. They focus on what they might lose, rather than what they might gain.

So I would suggest making the same experiments of Dan Ariely in your country with people you target for your business before applying some of these tactics …

To conclude, (in fact I would like to write much more over this book) I would like to finish with the statement that the book starts “Everything Is Relative”. I THINK THAT THIS BOOK IS REALLY WORTH READING at least it is a good first step to being aware (not being trapped) of business manipulations!!! :) :) :)

The Pursuit of Elegance

1. The Pursuit of Elegance

Matthew E. May says: “All the Best Ideas Have Something Missing".

I've read many of the blogs posted in our CTO 2011 spring and many of them somehow have found their missing part and suggesting/ creating/ proposing or self implementing their best ideas.

So I began to wonder if I had any similar story. I think something was missing to me!

Then remind me of those days in Albania (my childhood) when we were always trying to improvise our toys (and I think everybody of us remembers)…

I mean every time there was some spare part missing impossible to find and this make us not searching anymore for it but inventing something new. So, from a missing spare part a new idea was generated into us and at those time those simple toys were perfection for our eyes

I don't know if my example meets the author requirements for elegance, but I think it does.

Br,

Idi SULO