erratio

I'm ambivalent about recommending this book to LW readers. On the one hand, it's well-written and has lots of interesting anecdotes about Ariely's experiments. He also includes a full reference list at the end of all the papers published based on the studies he describes in the book, which is nice. On the other hand, almost none of the material should be really new to most people here, and a lot of the chapters turned out to be summarisable in a single sentence, indicating a large amount of fluff. Anyway, I spent a couple of hours today writing up a quick summary of each chapter, and have included my notes below. CHAPTER 1 - EVERYTHING IS RELATIVE When presented with multiple options, some of which are similar to each other and some of which are in separate reference classes, people will consistently pick the best option from the set of similar options because they are directly comparable. Similarly, the use of decoy options when offering products will influence their choices - including a ludicrously expensive option makes the others look good by comparison, and when offering three choices in the same reference class the majority of consumers will pick the middle one. CHAPTER 2 - SUPPLY AND DEMAND: Examines the anchoring effect. People asked to list the last two digits of their Social Security number unconsciously used that number as an anchor when bidding for various items later. Black pearls went from worthless to priceless after being displayed next to other high-priced gemstones. When sequentially given 3 different anchoring points, people stuck to the first one presented even if the later ones would have been more beneficial for them. It is also possible to self-anchor, ie. if I buy something expensive despite a previous habit of being cheap, I am now more likely to buy something expensive again because I use my own novel behaviour as an anchor. Chapter 3 - The power of FREE! People are irrationally attached to getting free stuff. In one experiment, he