Most articles or books on this topic begin by saying something about the way we generally view ourselves as consistent and logical, and about how traditional economics assumes we are rational decision-makers. But with behavioural economics thriving, and so many books being published showing that we’re anything but rational, and instead prone to a series of intriguing heuristics and biases (Nudge, Mistakes were made but not my be, Why smart people make big money mistakes, A mind of its own, Intuition … the list goes on), it makes me wonder how much longer it will be before our profound irrationality becomes common knowledge.
That said, this new article provides a neat round-up of some examples of how irrational we can be. For example, there’s the seduction of things that are free:
“We asked people to choose between an expensive Lindt truffle and a much cheaper equivalent, a Hershey’s Kiss. When we set the price of the truffle at 15 cents and the Kiss at one cent, 73 per cent chose the truffle, and 27 per cent chose the Kiss.
Then we offered the Lindt truffle for 14 cents and the Kisses for free. The humble Hershey’s Kiss was still 14 cents cheaper – just as it had been – but suddenly it became a big favourite. 69 per cent chose the Kiss, forgoing the opportunity to get the Lindt truffle for a very good price.”
There’s also a fun quiz which lets you gauge just how irrational you are. Apparently I hedge my bets, being neither wholly irrational or wholly rational. See how you do.