Predictably Irrational: The Hidden Forces That Shape our Decisions

The opening pages of Chapter 8 reveal a “real-life experiment” (169) that occurred on Duke University’s campus in the spring of 1994. Ariely explains how students camped out in front of the football stadium to go through an intricate selection process for football tickets. The selection process involved a lottery, meaning that not all students who camped out would get tickets. Ariely and a colleague predicted that the students who now had ownership of the tickets would value the tickets more than students who didn’t obtain them, even though they all worked equally hard trying to get them. The researchers thought that perhaps the “endowment effect” was happening, which is when someone values the thing they own more than others value it.

To test this hypothesis, Ariely and his colleague became ticket scalpers. They set out to purchase tickets from some of the students who won them and sell them to students who didn’t. They found that students who were not lucky enough to get a ticket were willing to buy one for less than $200. When Ariely and his colleague asked the non-ticket-holders how they arrived at this price, they noted other ways they could spend the money, such as for foods and drinks at a bar to watch the game. In contrast, students who won tickets were only willing to sell the tickets for several thousand dollars. The ticket holders justified their price to Ariely and his colleague in terms of the memories the experience would create. The researchers also found that not a single ticket holder was willing to sell their ticket for a price that a non-holder was willing to pay.

From a traditional economic perspective, both the ticket holders and non-holders should have valued the ticket equally. However, Ariely’s findings contradict this notion. Despite both groups of students putting the same effort into attempting to get a ticket, the ticket holder imagined “the glory of the game” (172), whereas the non-holder “imagined what else they could buy with the price of the ticket” (172).

Ariely believes “three irrational quirks in our human nature” (173) explain why ownership can cause strange behavior. The first quirk is that people come to love what they own; they associate memories with these items which increases their attachment to them. The second quirk is that rather than focusing on what they might gain from giving up the item, people focus on what they would lose. The final quirk is that people assume others will value the item as much as they themselves do.

Chapter 9 opens with the story of Chinese commander Xiang Yu. In 210 BC, Xiang Yu burned his own ships and crushed his army’s cooking pots because without these two items, his army “had no other choice but to fight their way to victory or perish” (183). His army successfully defeated their enemy. This story is remarkable because Xiang Yu’s actions go against normal human behavior. People tend “to keep all our options open” (184) without realizing that they sacrifice something for having all those opportunities.

To better understand the human compulsion to keep doors open, Ariely and a colleague designed a series of experiments called “the ‘door game’” (187). The game was on a computer. In the first experiment, participants had the opportunity to enter one of three rooms simply by clicking on the door that corresponded to the room. Once they were in the room, participants earned money by clicking their mouse. The trick was to find the room with the biggest payout and click as often as possible in the allotted time. This was not a trivial task. Each participant had 100 clicks, and switching rooms used up one click. Ariely notes, “On one hand, switching from one room to another might be a good strategy for finding the biggest payout. On the other hand, running madly from door to door (and room to room) meant that you were burning up your clicks which could otherwise have made you money” (188). This first experiment confirmed what Ariely already suspected about human behavior: People easily pursue a source of satisfaction if there is a clear goal.

Ariely and his colleague then changed the experiment to make a door close after it remained unvisited for 12 clicks. All the participants made less money than in the first experiment because they moved back and forth between doors to make sure none closed. They would have made more money if they had picked a room and stayed there for the duration of the study. Ariely further modified the experiment, telling participants the exact monetary outcomes they could expect from each room, but the results always matched those from the second experiment. The participants maintained “the same irrational excitement about keeping their options open” (191).

To overcome this irrational compulsion to maximize open doors, Ariely suggests that people work to consciously start closing some of them. Because small doors are easier to close than larger ones, Ariely believes people should start there. They need to close doors because indecisiveness has consequences.