Predictably Irrational

by Dan Ariely

Power of COMPARISON

We are always looking at the things around us by comparing them with others.
Sales were slow for William Sonoma. When they released an expensive decoy bread machine, the first product appeared to be a bargain, and sales picked up.

Power of ANCHORING

Once we buy a new product at a particular price, we become anchored to that price.
When there was zero demand, Salvador Assael put black pearls in the window of a 5th avenue store with a high price tag. He also ran printed ads right next to diamonds. Soon, black pearls were considered precious.

Power of FREE

"Free" has a cost. It is a strong emotional trigger that trumps rational thinking.
We wait in line for hours to get something, even if the time/value ratio does not make sense. Free shipping is still an effective USP.

Power of NORMS

Social and market norms differ.
You cannot give 50 dollars for your mom's dinner. Your employer cannot pay you with hugs. When you request something, think carefully about which norm to pick.

Power of DEADLINES

Giving up on our long-term goals for immediate gratification is procrastination.
We can remedy procrastination by setting deadlines and having short term gratifications.

Power of OWNERSHIP

We overvalue what we own.
A homeowner expects a higher bid for the house because of creative interior design, while the buyer wishes a discount because of it.

Power of NO-OPTION

Sometimes closing options will eliminate distraction from the main objective.
While his troops slept, a Chinese general burned his ships, so they had to either fight their way to victory or die. They won 9 consecutive battles.

Power of EXPECTATIONS

Our expectations shape our experiences.
We enjoy highly rated products more.

Power of PRICE

Price has an impact on efficacy.
More expensive aspirin -with the same active ingredient- has more powerful effects on people.