Dan Ariely's book is one of the most important books of all time on human behavior.
Select insights from the book:
WHY WE DO WHAT WE DO
1. Cheating is a lot easier when it's a step removed from money.
An experiment on MIT's communal refrigerators.
* When (the researcher) slipped in a 6-pack of Coke, all the Cokes had vanished within 72 hours
* When he left a plate containing 6 $1 bills, no one *ever* took any of the money
* Would you feel bad about taking a pen for you child? How about taking $0.10 from petty cash to pay for a pen for your child? The two are economically identical, but get very different reactions.
2. We have no idea how dishonest we are. Overall, cheating is not limited by risk; it is limited by our ability to rationalize the cheating to ourselves.
3. Given the opportunity, many honest people will cheat
4. "We care about honesty and want to be honest. The problem is that our internal honesty monitor is active only when we contemplate big transgressions, like grabbing an entire box of pens. For little transgressions like taking a single pen, we don't even consider how these actions would reflect on our honesty."
5. Those who signed the honor code didn't cheat. Those who didn't see the statement showed 84% cheating.
6. There are three fundamental quirks of human nature:
A. We fall in love with what we already have.
B. We focus on what we might lose, rather than what we might gain.
o When thinking about selling something, you think about all the things you'll miss, rather than the hassles of ownership.
* We assume that other people will see the transaction from the same perspective as we do.
7. Peculiarities of ownership:
* The more work you put into something, the more ownership you begin to feel for it (The "IKEA effect")
* We can begin to feel ownership even before we own something (The "eBay effect").
o This is why trials and money-back guarantees work so well! People hate to downgrade.
* These ownership quirks apply to ideas as well as things...which is why we end up with ideologies that no longer seem rational.
1. Social norms such as reciprocity are warm and fuzzy, with no explicit quid pro quo
2. Market norms are explicit and hard--you get what you pay for.
3. "People are willing to work free, and they are willing to work for a reasonable wage, but offer them just a small payment and they will walk away."
Thinking about money puts one in a market frame of mind. Subjects (of an experiment) were:
- More selfish and self-reliant
- Wanted to spend more time alone
- Were more likely to select individual tasks rather than those that required teamwork
- Chose to sit farther away from others
4. "A salary alone will not motivate people to risk their lives. Police officers, firefighters, soldiers--they don't die for their weekly pay. It's the social norms--pride in their profession and a sense of duty--that will motivate them to give up their lives and health."
5. "Money, as it turns out, is very often the most expensive way to motivate people. Social norms are not only cheaper, but often more effective as well."
[From the Great Books Series. Also see The Success Manual - Encyclopedia of Advice, which contains summaries of 100+ Most useful books.]
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