Saturday, January 21, 2012

The Upside Of Irrationality: Chapter 3

Through a series of experiments, Dan Ariely documents the many ways in which humans behave irrationally. By understanding these human tendencies, we can both learn to behave more rationally when it is to our benefit, and better understand why those around us are behaving in the way they are.

We overvalue things we make ourselves. In other words, the same object will have a different perceived value based on who made it. Ariely demonstrated this using a series of experiments.

An additional finding is that the more effort we put into something, the more we overvalue it. But this applies only if we actually complete the job. Apparently, we carry no sentimental feelings towards objects we put a lot of effort into but couldn't finish.

Some companies have figured this out. By getting customers to put some effort into a job (e.g. eggs must be added to some cake mixes), customers end up valuing the end product more. But there is a fine line to walk here for companies, because too much effort results in customers giving up and not valuing the end product (as per the last paragraph).

Ariely argues that based on these conclusions, we should revisit how we view relaxation. Today, we often pay to have our gardens tended to, or our "surround sound" systems installed. But we may actually gain much more enjoyment out of them in the long-term if we put the effort in ourselves!

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