Human Behavior and Economics

In today’s world, everyone wants to be different and unique. Have you ever imagine that the quest for being different is making us act in the same way. It is difficult to get a man to understand something when his salary depends upon his not understanding it.

Standard economics assumes that we are rational – that we know all the pertinent information about our decisions that we can calculate the value of the different options we face, and that we are cognitively unhindered in weighing the ramification of each potential choice.

The first paragraph is about human behaviours and the second is about economics. Can we relate these two seemingly different topics and stream? The book “PREDICTABLY IRRATIONAL” by a behaviour economist “Dan Ariely” say’s YES.


Have you ever imagine that,

  1. Why everything is relative-even when it shouldn’t be?
  2. Why the price of pearls and everything else (smartphones) is up in the air?
  3. Why we often pay too much when we pay nothing?
  4. Why we are happy to do things, but not when we are paid to do them?
  5. Why we behave differently when we are passionate as compare to cool and relax state?
  6. Why we can’t make ourselves do what we want to do?
  7. Why we overvalue what we have?
  8. Why options distract us from our main objectives?
  9. Why the mind gets what it expects?
  10. Why expensive thing always seems attractive and satisfying?
  11. Why we are dishonest?
  12. Why dealing with cash makes us more honest?

This book raises the question of our knowledge about us. Do we know ourselves entirely and how we will act in a different situation? The good thing about the book is the experiment that the author did to understand these question more profoundly and prove how often people act irrationally that it becomes predictable. If you wish you can repeat it by yourself on others or else make yourself the subject of the study and find out how different or same, you are as compared to the rest of the world.

Few statements from the book, you might able to relate.

  1. We focus more on what we lose instead of what we gain.
  2. The more work you put into something, the more ownership you began to feel for it.
  3. How could any two parties look at precisely the same event and interpret it as supporting their opposing point of view?
  4. If you tell people upfront that something might be distasteful, the odds are good that they will end up agreeing with you.
  5. When choosing between two products we often overreact to the free one.

A good book and by reading it you will be able to understand why people act the way they did or what is the most possible course of action we choose in the given situation.

Human Behaviour and Economics: 2

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