It’s a helpful guide to our irrationality and how to overcome it in marketplace and everyplace. Reading this book we understand how systematically we do certain mistakes , how we repeat them again and again and of course we learn how to avoid some of them .
Ariely has discovered during years of researching behavioral economics that people tend to behave irrationally in a predictable fashion .
In order to avoid irrational behavior he suggested the cure “break the cycle of relativity”. By doing this people can control what goes around them. The focus on smaller "circles" can boost relative happiness and also change the focus of how to see things.
The author claims that the relationship between supply and demand are based on memory rather than on preferences and this determinant of market prices can be easily manipulated. We generally do purchase using the concept of anchor price.
When something is given for free, we can’t leave it go even when it’s not worth for the money and time spent. This readiness for a free concept must be use to drive business and social policy.
But not receiving for free but also doing something as a "favor" produce better results than when it’s paid. That’s why social norms are making their way into the market norms. Money is the most expensive way to motivate people. Social norms are cheaper and often more effective.
Time after time we make decisions under high – emotion situation.The ideas to improve our decision making abilities in emotion-provoking situation such as On Star system is very interesting.
In our cool state we make long term decisions whereas in hot state we put off goals for immediate gratification .If we have consequences we are more likely to meet goals, appointment, deadlines etc.
Often we overvalue what we have and we make irrational decisions about ownership. To avoid the endowment effect Ariely suggested to create a barrier between ourselves and the material things.
The last suggestion is for the effect of expectations. They can nearly influence every aspect in our lives by override our sense, partially blinding us from the truth.
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