The talk is amusing because it tells us, rather plainly, that while we think we are being very rational, most of the time we are actually very irrational. Dan Ariely, behavioural economist and author of “Predictably Irrational, The Upside of Irrationality” and the “Honest Truth about Dishonesty” begins by saying, “I'll tell you a little bit about irrational behaviour. Not yours, of course –– other people’s.” There is however, more to it. Ariely says, “When it comes to building the physical world, we kind of understand our limitations. We build steps. We understand our limitations, and we build around it. But for some reason when it comes to the mental world, when we design things like healthcare and retirement and stock markets, we somehow forget the idea that we are limited. I think that if we understood our cognitive limitations in the same way that we understand our physical limitations, we could design a better world.”
There are two kinds of irrationality that Ariely talks about. The first deals with visual illusions. He explains that by showing two tables, one long and the other square and asks which is longer. It turns out that the inch tape finds them to be of equal length, one measured vertically and the other horizontally. But once the inch tape is out of the picture, you still feel the long table is longer than the square one.
“Our intuition is really fooling us in a repeatable, predictable, consistent way. And there is almost nothing we can do about it…I want you to think about illusion as a metaphor…We have a huge part of our brain dedicated to vision –– bigger than dedicated to anything else. And we are evolutionarily designed to do vision. And if we have these predictable repeatable mistakes in vision, which we’re so good at, what's the chance that we don’t make even more mistakes in something we’re not as good at –– for example, financial decision making: something we don’t have an evolutionary reason to do, we don’t have a specialized part of the brain, and we don’t do that many hours of the day.”
Ariely tells us about a research by Johnson and Goldstein which shows the percentage of people who indicated they would be interested in giving their organs to donation. “… And you basically see two types of countries: countries that seem to be giving a lot; and countries that seem to giving very little, or much less. The question is, why? Why do some countries give a lot and some countries give a little?”
The answer, it turns out, lies in the manner in which the questionnaire was framed.
Ariely says, “…think about what this means. We wake up in the morning and we feel we make decisions. What this is actually saying is that much of these decisions are not residing within us. They are residing in the person who is designing that form… it’s also very hard to intuit these results...it’s very hard to even accept the idea that we actually have an illusion of making a decision, rather than an actual decision.” Ariely gives examples to show that this kind of cognitive illusion exists in every field, be it in a doctor’s decision or our own everyday decision like which kind of subscription to opt for. Extending the idea Ariely says, “People believe that when we see somebody we know immediately whether we like them or not, attracted or not. I showed some people a picture of Tom, and a picture of Jerry. I said “Who do you want to date? Tom or Jerry?” But for half the people I added an ugly version of Jerry. The other people, I added an ugly version of Tom. And the question was, will ugly Jerry and ugly Tom help their respective, more attractive brothers? The answer was absolutely yes. When ugly Jerry was around, Jerry was popular…”
So he concludes, “…in visual illusions we can easily demonstrate the mistakes; in cognitive illusion it’s much, much harder to demonstrate to people the mistakes.”
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