The Upside Of Irrationality

Dan Ariely, “The Upside Of Irrationality: The Unexpected Benefits of Defying Logic”, Harper Collins, 2010, 304 Pages

In 2008 I read and posted my review of “Predictably Irrational” by this same author. I would recommend that book as more pertinent than this one—but this one is OK too. The author, Dan Ariely, is a behavioral economist, and in this book, he shares personal experiences along with various experiments he's conducted that illustrate the positive (and not so positive) effects irrationality can have on our lives. I particularly liked the chapter on revenge and why revenge is so important to us. I was not really surprised that people would hurt themselves to get revenge, but then I’m Irish.

Ariely addresses topics such as why large bonuses can make CEOs less productive, what really motivates people on the job, why online dating doesn't work (I met Linda online and it is working fine). It is particularly interesting how emotions but not thinking compels us to act, and how one unwise action can become a long-term habit. The experiments are unique and entertaining.

My Notes:

Pg. 36: If senior vice presidents were paid to lay bricks, motivating them through high bonuses would make sense. But people who receive bonus-based incentives for thinking about mergers and acquisitions or coming up with complicate financial instruments could be far less effective than we tend to think—and thee may even be negative consequences to really large bonuses. For tasks that require cognitive ability, low to moderate performance-based incentives can help. But when the incentive level is very high, it can command too much attention and thereby distract the person’s mind with thoughts about the reward. This can create stress and ultimately reduce the level of performance. The author then performed experiments proving this point. Executives do not seem to get this point. As Upton Sinclair once noted, ‘It is difficult to get a man to understand something when his salary depends upon his not understanding it.’

Pg. 104: Experiments demonstrated four principles of human endeavor:
• The effort that we put into something does not just change the object. It changes us and the way we evaluate that object.
• Greater labor leads to greater love.
• Our overvaluation of the things we make runs so deep that we assume that others share our biased perspective.
• When we cannot complete something into which we have put great effort, we do not feel so attached to it.

Pg. 147: Even relatively simple transgressions can ignite the instinct for revenge. Once we feel the need to react, we often do not distinguish between the person who actually made us angry and whoever suffers the consequences of our retaliation.

Pg. 276: Emotions easily affect decisions and this can happen even when the emotions have nothing to do with the decisions themselves. Additionally, the effects of emotions can outlast the feelings themselves and influence our long-term decisions down the line. The most practical news is this: if we do nothing while we are feeling an emotion, there is no short or long-term harm that can come to us. However, if we react to the emotion by making a DECISION, we many not only regret the immediate outcome, but we may also create a long-lasting pattern of DECISIONS that will continue to misguide us for a long time.

Pg. 294: Some of the ways in which we are irrational are also what makes us wonderfully human (our ability to find meaning in work, our ability to fall in love with our creations and ideas, or willingness to trust others, our ability to adapt to new circumstances, our ability to care about others, and so on.