We all know humans don’t behave rationally in all situations, but it’s still very cool to see a nicely compiled list of common ways in which we are irrational, complete with examples that we can all relate to.
The book is organized into 99 short chapters, each about 2 pages long, and talks about an irrational phenomenon, with examples.
For examples, we are willing to walk 10 minutes to another store to buy $2 cheaper milk, but practically don’t care about $100 on the price of a $20K car. We think in proportions when proportions don’t make sense. $2 is $2, whether it’s part of a $20K car or a $3 carton of milk.
Every TED talk we listen to, every motivational speech we listen to, and every successful person we talk to, tell us that the way to success is to follow your dreams. That’s because we don’t invite people who followed their dreams and failed miserably to give TED talks. Survivorship bias. We always try to find common personality traits between successful people, but what we often forget to do, is to see if those traits also exist in people who failed. In a lot of cases they do. Our sampling process is very severely biased.
You spent $10 on a movie ticket, and realized after the first half hour that it’s an incredibly boring movie. Do you walk out? Or would you stay to “get your money’s worth” and “minimize losses”? Most people would stay, but that’s illogical. You have already wasted $10 and half an hour of time, but that doesn’t justify wasting another 1.5 hour of time. Sunk cost fallacy. This is especially applicable in engineering – we spent 2 million dollars and 2 years of time already on this project that is now clearly not going to be profitable because a competitor has a functionally equivalent product at a price we can’t even hope to beat. Do we cancel the project? Of course. Already-incurred costs should not affect our decisions at all.
An MBA school says their graduates make $50K more per year than other university grads. Does that mean if you go there, you’ll end up making $50K a year more on average? Quite possibly not. It’s entirely possible that the type of people the school attracts would have made more money than others anyways whether they went to the school or not. Correlation does not imply causation. Everyone knows the saying, but we still fall for it all the time.
Why are we much more likely to donate when we see a picture of a suffering African child, than if we saw a line of text that tells us 500 people die of hunger every day in Africa? Why are we much more sensitive to photographs than numbers, when numbers tell us much more?
Or the fact that the average human has 1 testicle, and that most people have an above average number of toes (our brains intuitively interpret statistics incorrectly a lot of times).
Those are just a few of the 99 types of irrationality discussed in the book.
Does knowing them allow me to act more rationally? I don’t know. Probably not. After all, we consistently overestimate the amount of control we have over the world, and also the effects of our decisions.
What I DO know though, is it’s a very fun and engaging read.