Predictably Irrational

25 Mar 2012

This is the second time of my reading day; I'll try to finish one book within one day every week.

Today I have finished the book “Predictably Irrational”. Well, actually I have finished 2/3 of it because I read the first 1/3 long time ago.

It took me like 5 hours this time…

The book is very interesting. There are many simple experiments to test how human actually makes decisions. It proves that human is not rational at all.

We make weird choices based on context, social pressures, emotions and etc.

Pricing

One example that I really like is about pricing your products.

Let's assume you are a newspaper company, and these are your offers to customers:

  1. $59 - Digital-copy 1-year subscription
  2. $89 - Hard-copy 1-year subscription

Most of the people will choose the $59 offer. But if you tweak your offers to:

  1. $59 - Digital-copy 1-year subscription
  2. $89 - Hard-copy 1-year subscription
  3. $89 - Hard-copy and Digital-copy 1-year subscription

Most people will choose the third offer. Isn't it amazing?

The rationale goes like this:

People don't really know the value of stuffs. In the second example, people can clearly see that the third offer is better than the second one. Therefore, they unreasonably think that the third offer is also the best one.

The Power of Price

The book also tells about the experiments that:

A pill with a higher price cure people better than the same pill with a lower price.

It's just too funny

The book has so many other insights. I recommend you read it :D

Give it a kudos