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Dan Ariely and Irrational Comparison

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Re: Dan Ariely and Irrational Comparison

#31

Post by zeroonetwothree »

xondono wrote: post #15

I've been very interested in the behavioural economics field in general, but for some reason I always find that Ariely tends to jump too fast to conclusions. Most of his experiments I read about have other explanations that fit the data just as well. For instance, the "The Economist" subscription has another explanation to simple comparison, choice deferral . People don't really know if they'll want the online or pri…

This is a very good point that is often overlooked. Many “irrational” actions may actually be much more rational when interpreted a differently way. For example, loss aversion is totally rational since money has diminishing marginal utility. (And studies have mostly disproven loss aversion with small amounts)

Another issue with experiments is that they are not realistic scenarios. For example, in the Economist experiment no one actually paid any money. Which makes it basically worthless. We’ve often found in economics research that what people say they will do and what they actually do is very different. Moreover, studies only find that some % act irrationally but then it’s reported as if everyone did.

Now obviously humans are not totally rational, but it does us a disservice to act as if we are so terrible at decisions all of the time.

Re: Dan Ariely and Irrational Comparison

#32

Post by sharker8 »

mdoms wrote: post #12
coderintherye wrote: post #7

His follow-on book: "The Upside of Irrationality" is also a great read.

It's almost the exact same book. I felt ripped off having bought both.

He should release a mini ebook for free. To capture the irrational value we place on free stuff, of course.

Re: Dan Ariely and Irrational Comparison

#33

Post by clairity »

beefield wrote: post #26
sprafa wrote: post #16

Earlier quoted context omitted.

Charlie Munger said "if economics isn't behavioral, what the hell is it?"

A weird bastard child of ideology and mathematics.

note that an ideology on its own is not bad (or necessarily good). it's being ideological--adhering to an ideology against any and all evidence--that's bad. humanity, including science, economics, the arts, etc., is driven by ideology, ideas that take hold because of a tantalizing kernel of truth in them. progress (and regress) happens on the back of ideology.

the rational actor at the center of economics is an ideological construct that we act to always maximize our economic return. how we adhere, and the system adheres, to that ideal has been the focus of a significant strain of economic thought. behavioral economics is another ideological strain that focuses primarily on those deviations (perhaps as a dominant mode) rather than the adherences of the progenitor ideology.

Re: Dan Ariely and Irrational Comparison

#34

Post by theplague42 »

xondono wrote: post #23
ced wrote: post #21

Earlier quoted context omitted.

I don't get your argument. Those who are in "choice deferral" and chose online+print in the first experiment ought to have picked the same in the second experiment, but they didn't.

If you make me chose right now between online and print, I need to think which of those suits me better, will I read on my phone? Would I rather have the physical thing and have some rest time from the screens? If there’s an easy to pick offer bundling the two, I’d rather pay the extra to keep the choice open, that is, to choose later.

But that's not what happened! When the print-only option was removed, people switched to the cheap online-only option. I recommend you re-read the description of the study.

Re: Dan Ariely and Irrational Comparison

#35

Post by function_seven »

ghaff wrote: post #29
sokoloff wrote: post #17

Earlier quoted context omitted.

In setting defaults, you’re always making a choice. “By default, all drivers will not be marked as organ donors.” vs “By default, all drivers will be marked as organ donors.” “By default, all employees at companies with 401(k)s will save X% of their eligible salary in 401(k)s.” You’re making a choice for them in any event.

I agree with you but we also need to be careful given how powerful defaults are. Even Thaler has, I believe, argued against organ donation being opt out; rather I think he's argued for requiring a yes/no choice when driver's licenses are renewed. (The argument is opt out would lead to next of kin/families arguing that the deceased never made a choice to donate.)

Ad companies argued this when Microsoft updated IE (or was it Edge?) to set the DNT flag to “1” by default.

I think they were right to argue as such, and wonder if MS knew that defaulting DNT to on would poison the well like that.

It’s a good argument. When people argue over what a default should be, they often don’t realize that it’s possible to have no default at all, and force an explicit choice.

Re: Dan Ariely and Irrational Comparison

#36

Post by sokoloff »

function_seven wrote: post #35
ghaff wrote: post #29

Earlier quoted context omitted.

I agree with you but we also need to be careful given how powerful defaults are. Even Thaler has, I believe, argued against organ donation being opt out; rather I think he's argued for requiring a yes/no choice when driver's licenses are renewed. (The argument is opt out would lead to next of kin/families arguing that the deceased never made a choice to donate.)

Ad companies argued this when Microsoft updated IE (or was it Edge?) to set the DNT flag to “1” by default. I think they were right to argue as such, and wonder if MS knew that defaulting DNT to on would poison the well like that. It’s a good argument. When people argue over what a default should be, they often don’t realize that it’s possible to have no default at all, and force an explicit choice.

If you require customers to make dozens of choices because you’re not willing to make some sensible default choices, some of them will make the choice to use another browser.

I’m not a Microsoft cheerleader (nor detractor) in general, but in this case, I’m glad they took a position and chose a default on behalf of their customers.

Re: Dan Ariely and Irrational Comparison

#37

Post by vaidhy »

I was originally fascinated by this book and others like it. During the course of my reading, I stumbled upon Gerd Gigerenzer and I learnt a different interpretation. In short, most of these experiments assume full information is available to the testers and make an argument about rational process. As such, their applicability in real life is small, in specific edge cases. The question we should ask and answer is that, in a world of partial, incorrect and misleading information, what is the most rational judgement to make? And that mostly matches with how we behave.

Re: Dan Ariely and Irrational Comparison

#38

Post by Drdrdrq »

sokoloff wrote: post #36
function_seven wrote: post #35

Earlier quoted context omitted.

Ad companies argued this when Microsoft updated IE (or was it Edge?) to set the DNT flag to “1” by default. I think they were right to argue as such, and wonder if MS knew that defaulting DNT to on would poison the well like that. It’s a good argument. When people argue over what a default should be, they often don’t realize that it’s possible to have no default at all, and force an explicit choice.

If you require customers to make dozens of choices because you’re not willing to make some sensible default choices, some of them will make the choice to use another browser. I’m not a Microsoft cheerleader (nor detractor) in general, but in this case, I’m glad they took a position and chose a default on behalf of their customers.

Unfortunately (and predictably) it backfired though. If it no longer represents a conscious user choice, DNT can be pretty safely ignored by Google and the likes.

Re: Dan Ariely and Irrational Comparison

#39

Post by xondono »

mekoka wrote: post #28
xondono wrote: post #15

I've been very interested in the behavioural economics field in general, but for some reason I always find that Ariely tends to jump too fast to conclusions. Most of his experiments I read about have other explanations that fit the data just as well. For instance, the "The Economist" subscription has another explanation to simple comparison, choice deferral . People don't really know if they'll want the online or pri…

Regarding choice deferral, perhaps you should take another closer look at that experiment. It seems to me that you may have missed the fact that the choice that was taken away is not "online + print", but rather "print only", which yielded 0 subscribers in the original batch.

I didn't, think of it this way:

In the first experiment I can choose if I'd rather have online (59$) or print version(125$). Either way I'm risking the disappointment of taking the wrong choice, or I can choose online for 59$ plus a 66$ hedge against choosing wrong.

In the second experiment you've eliminated the risk of choosing print and realizing later that I wanted online, so hedging makes less sense (i.e. I'm willing to pay less for hedging my choice).

Re: Dan Ariely and Irrational Comparison

#40

Post by 2T1Qka0rEiPr »

ghaff wrote: post #30
kashyapc wrote: post #22

Earlier quoted context omitted.

About 10 years ago, I too, as a newbie-layman, started with "Predictably Irrational". I recall being similarly fascinated, and recommending it to anyone who'd listen to me. It's surely a gentler start to the field; and I concur with you on suggestions for deeper material.

Nudge is pretty easy reading from Thaler and Sunstein. Personally tough, I preferred his Misbehaving which goes into his history with the field. Way back when, I had a couple courses with Thaler when he was calling the field Behavioural Decision Theory.

Agreed - Misbehaving is a really interesting history of the development of the field, and the characters introduced along the way. I was also doing Thaler a dis-service, I find his writing to be far more page-turny than Kahneman or Sunstein.
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