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predictably irrational trades we make are not necessarily going to be an accurate reflection of the real pleasure or utility we derive from those products. In other words, in many cases we make decisions in the marketplace that may not reflect how much pleasure we can get from different items. Now, if we can't accurately compute these pleasure values, but frequently follow arbitrary anchors instead, then it is not clear that the opportunity to trade is necessarily going to make us better off. For example, because of some unfortunate initial anchors we might mistakenly trade something that truly gives us a lot of pleasure (but regrettably had a low initial anchor) for something that gives us less pleasure (but owing to some random circumstances had a high initial anchor). If anchors and memories of these anchors—but not preferences— determine our behavior, why would trading be hailed as the key to maximizing personal happiness (utility) ? So, WHERE DOES this leave us? If we can't rely on the market forces of supply and demand to set optimal market prices, and we can't count on free-market mechanisms to help us maximize our utility, then we may need to look elsewhere. This is especially the case with society's essentials, such as health care, medicine, water, electricity, education, and other critical resources. If you accept the premise that market forces and free markets will not always regulate the market for the best, then you may find yourself among those who believe that the government (we hope a reasonable and thoughtful government) must play a larger role in regulating some market activities, even if this limits free enterprise. Yes, a free market based on supply, demand, and no friction would be the ideal if we were truly rational. Yet when we are not rational but irrational, policies should take this important factor into account. 48
CHAPTER 3 The Cost of Zero Cost Why We Often Pay Too Much When We Pay Nothing Have you ever grabbed for a coupon offering a FREE! package of coffee beans—even though you don't drink coffee and don't even have a machine with which to brew it? What about all those FREE! extra helpings you piled on your plate at a buffet, even though your stomach had already started to ache from all the food you had consumed? And what about the worthless FREE! stuff you've accumulated— the promotional T-shirt from the radio station, the teddy bear that came with the box of Valentine chocolates, the magnetic calendar your insurance agent sends you each year? It's no secret that getting something free feels very good. Zero is not just another price, it turns out. Zero is an emotional hot button—a source of irrational excitement. Would you buy something if it were discounted from 50 cents to 20 cents? Maybe. Would you buy it if it were discounted from 50 cents to two cents? Maybe. Would you grab it if it were discounted from 50 cents to zero? You bet!
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USA $25.95 CANADA $27.95 • Why do
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Predictably Irrational—it's not w
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predictably irrational The Hidden F
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To my mentors, colleagues, and stud
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contents CHAPTER 4 The Cost of Soci
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Introduction How an Injury Led Me t
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introduction sion of a large magnes
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introduction profoundly changed my
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introduction my results, in the hop
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introduction confusing them. We can
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predictably irrational gaze back at
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APPENDIX: CHAPTER 5 A complete list
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predictably irrational TABLE 3 RATE
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predictably irrational had to have
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predictably irrational do family tr
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predictably irrational same experim
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predictably irrational deadlines at
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predictably irrational check, which
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predictably irrational the best way
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predictably irrational Savings We c
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predictably irrational Dear Sumi, T
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predictably irrational self-control
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predictably irrational outside the
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predictably irrational instance, si
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predictably irrational "All right,"
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predictably irrational Suppose you
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predictably irrational still the to
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predictably irrational idea—wheth
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predictably irrational antithetical
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predictably irrational likely end u
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predictably irrational the correspo
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predictably irrational this wasn't
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predictably irrational waste their
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predictably irrational game. It wil
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predictably irrational Here's anoth
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C HAPTE R 9 The Effect of Expectati
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the effect of expectations to such
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the effect of expectations Mina and
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the effect of expectations will be
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the effect of expectations get rid
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the effect of expectations by chang
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the effect of expectations the way,
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the effect of expectations Research
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the effect of expectations the crux
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C HAPTE R I O The Power of Price Wh
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the power of price removed. The thi
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the power of price funerals. By 178
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the power of price better. And if y
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the power of price the common cold
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the power of price with the same gr
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the power of price workouts. Both g
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the power of price sage on the bott
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the power of price is nothing "just
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the power of price about placebos a
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the power of price ing wasn't silky
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CHAPTER It The Context of Our Chara
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the context of our character, part
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The Context of Our Character, Part
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CHAPTER 1 3 Beer and Free Lunches W
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eer and free lunches the beer ourse
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eer and free lunches Jonathan and I
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eer and free lunches who was his wi
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eer and free lunches But there's a
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eer and free lunches new strategies
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eer and free lunches we should cons
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Thanks Over the years I have been f
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thanks time in the institute's kitc
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list of collaborators match—an ov
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list of collaborators George is cur
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list of collaborators working toget
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notes 9. Sarah Bakewell, "Cooking w
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Bibliography and Additional Reading
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ibliography and additional readings
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Index arousal (continued) underpred
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Index Descartes, Rene, 43 diet, pro
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Index gifts: Burning Man based on e
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Index money: benefits of, 86 dishon
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Index relativity, 1-21 bread-making
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Index taste (continued) exotic-soun
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