Once this type of mistake has been committed, recovering a social relationship is difficult. Moreover, introducing market norms into social exchanges, as we have seen, violates the social norms and hurts the relationships. And we apply different norms to these two kinds of relationships. So we live in two worlds: one characterized by social exchanges and the other characterized by market exchanges. He also explains how he discovered that the "allure of free" tempts people to give up something better and why behavioral economics is important for policymaking. He talks to Robert Siegel about his experiments, which involve activities such as mock auctions, trick-or-treating and selling chocolate to college students. "Our willingness to pay, it turns out, is not just a function of the utility of the pleasure that we expect to get from, it's also influenced by all kinds of irrelevant factors that change our psychology but not our economic reasoning," Ariely says.Īriely is on the faculty of the Massachusetts Institute of Technology he's currently on leave and teaching at Duke University. Predictably Irrational explains how the reasoning behind those decisions is often flawed because of the invisible forces at work in people's brains: emotions, expectations and social norms. Instead, he finds, humans are "predictably irrational," which is also the title of his latest book. His conclusion? We don't do it the way economists typically say we do. As a behavioral economist, Dan Ariely studies the way people make economic decisions.
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