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Dan Ariely- Observations and Interpretations

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Dan discussed about irrational behaviour, he gave the example of hospital where he was present for a long time and same bandage removal procedure was done on him. Questions which arise due to the constant observation of the same procedure lead to search of alternative that is "if this alternative is taken then what...?" Experimentation plays an important role in interpretation and further judgment of irrational behaviour. Dan experimented on the procedure to remove bandages and concluded that we don't interpret duration as we interpret intensity.

Dan then talks about cheating, if we consider economics then it is easy to interpret the event on the basis of cost and benefits factors so in economics cheating can be interpreted as:-

How much benefit?

What are the chances of been caught and severity of punishment if caught?

But human tendency cannot be explained on basis of this cost benefit analysis. There is a personal comfort factor involved in the individual behaviour; there the economic rational theory doesn't work.

Dan conducted experiments to prove this point and he found that many people cheated but to a small extent this can explain the behaviour that according to human nature a little bit is acceptable it doesn't work on the theory of cost benefit analysis. He tried to see whether the people will cheat if the amount is high which will support the rational economic theory but this was not true, it was the irrational behaviour and it's human explanation that we will do wrong to a extent we feel it right.

He explained the behaviour that we all want to look at ourselves in the mirror and feel good about ourselves, so we don't want to cheat. On the other hand, we can cheat a little bit, and still feel good about ourselves, and he talked about personal fudge factor. He also talked about the behaviour of individuals when they are forced to remember the conscience (moral of right and wrong) then how their irrational behaviour changes which has no relations with the rational economic theory.

He also tried to see when the irrational behaviour of an individual changes:-

More if other people around us or from the peer (same) group also cheat.

More if you're removed from the reward (think stock exchange, options and derivatives)

He also talked that some of our irrational behaviour are counter intuitive so we don't like to question them and even experiment them.



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